Monday, November 24, 2008

FHA Insurance Armageddon Within 18 Months, Predicts Ex-Mortgage Investigator As Subprime "Wolves" Now Make Comeback As FHA Lenders

BusinessWeek reports:
  • As if they haven't done enough damage. Thousands of subprime mortgage lenders and brokers—many of them the very sorts of firms that helped create the current financial crisis—are going strong. Their new strategy: taking advantage of a long-standing federal program designed to encourage homeownership by insuring mortgages for buyers of modest means.

***

  • For generations, these loans, backed by the Federal Housing Administration, have offered working-class families a legitimate means to purchase their own homes. But now there's a severe danger that aggressive lenders and brokers schooled in the rash ways of the subprime industry will overwhelm the FHA with loans for people unlikely to make their payments. Exacerbating matters, FHA officials seem oblivious to what's happening—or incapable of stopping it. They're giving mortgage firms licenses to dole out 100%-insured loans despite lender records blotted by state sanctions, bankruptcy filings, civil lawsuits, and even criminal convictions.

***

  • Gary E. Lacefield, a former federal mortgage investigator who now runs Risk Mitigation Group, a consultancy in Arlington, Tex., predicts: "Within the next 12 to 18 months, there is going to be FHA-insurance Armageddon."

For more, see FHA-Backed Loans: The New Subprime (The same people whose reckless practices triggered the global financial crisis are onto a similar scheme that could cost taxpayers tons more) (go here for entire story on one web page).

Deed Thief Strikes S. Florida Couple; Regain Title After Year & A Half Of Aggravation

In West Palm Beach, Florida WPTV Channel 5 reports:
  • You've heard of horse thieves, well how about house thieves? It's a wild west kind of scam that can lead to the loss of what's probably your most valuable asset. Your house. And it turned out to be a nightmare situation for a Loxahatchee couple.

Reportedly, it took extensive investigative work on the part of the police and the homeowners to get the home back, but not after a year and a half, almost $4000 dollars in court costs, time from work, the aggravation and the stressful nights. The homeowners also reportedly lost their homestead exemption and their homeowner's insurance as a result of their home's title being taken out of their name.

For the story, see House thieves, who can steal your home.

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

Texas A Handy Haven For Those Seeking To Dodge Debts?

Bloomberg News reports:
  • Homeowners fleeing underwater mortgages in California and Florida know where to come up for air: Texas.

  • "Texas is an extremely friendly place to live if you owe money and do not want to pay,'' said Marjorie Britt, a bankruptcy attorney with Britt & Catrett PC in Houston. "If you have a lot of money and even more debt and want to shelter your assets, you can live fairly normally.''

  • Distressed borrowers can hang on to luxury cars, a primary residence, paychecks, retirement accounts, and even jewelry that creditors might claim elsewhere, Britt said.

For more, see Deadbeat Homeowners Tap Texas Bankruptcy Laws to Duck Creditors.

South Florida Developer Takes Hike, Unloading Unfinished 396 Unit High Rise Complex On Constuction Lender

In Broward County, Florida, the Daily Business Review reports:
  • Corus Bank, one of the most active lenders to developers during the condo construction boom, is taking title to the twin, 26-story Tao Sawgrass condominium buildings in Sunrise in lieu of foreclosure. Although there have been no closings on the complex’s 396 units, purchase deposits are in place on about 80 percent of the project, according to John Barkidjija, a Corus senior vice president in Chicago.

For more, see Condo Meltdown: Corus Bank takes title to Tao condos, hires firm to finish construction.

Sunday, November 23, 2008

Obama Dodges "Embarrassment Bullet" As Pritzker Squelches Talk Of Her Interest In Commerce Secretary Position

American Chronicle reports:
  • Billionaire Obama campaign finance chair Penny Pritzker did the smart, maybe the only, thing she could when she quickly scotched talk that she wanted to be Obama's Commerce Department Secretary.

***

  • Pritzker and her failed Chicago based Superior Bank were knee deep in the subprime lending mess. The bank engaged in deceptive and faulty lending, questionable accounting practices, and charged hidden fees. It did it with the sleepy-eyed see-no-evil oversight of federal regulators. It made thousands of dubious loans to mostly poor, strapped homebuyers. A disproportionate number of them were minority.

***

  • The predictable happened when many of the distressed homebuyers lost their homes. When the bank collapsed Pritzker and bank officials skipped away with their profits and reputations intact.

For more, see Pritzker Saved Obama Much Embarrasssment By Bowing Out Of Commerce.

South Florida Contractor Faces More Felonies For Allegedly Taking Customer Cash, Failing To Start, Finish Remodeling Jobs

In Plam Beach County, Florida, the South Florida Sun Sentinel reports:
  • [P]olice arrested Douglas Livingston, 41, [...] accusing him of two felonies- fraud and grand theft of more than $50,000. He took money from four Delray Beach clients for remodeling jobs that the company either never started or failed to finish, said Detective Tom Whatley of the Delray Beach Police Department.(1)

For more, see Oakland Park man arrested again on construction-related theft charges.

See also, WPTV Channel 5: Man arrested for allegedly scamming thousands of dollars.

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

(1) According to the story, the latest accusations echo the charges that Livingston, of Oakland Park, faces in Broward County Circuit Court as the chief executive officer of the now-defunct HomeCo Unlimited. He was reportedly arrested in November 2004 on 70 counts of extortion, theft and fraud related to remodeling jobs never completed. Former HomeCo customers accused him of verbally intimidating them, prompting six to file police reports against him, the story states. StiffingContractorsTheta

New Jersey Family Seeking Mortgage Rescue Now Left Fighting Foreclosure

In Bergen County, New Jersey, South Bergenite recently ran a story on a local homeowner who contends his home was stolen from him through an elaborate home foreclosure rescue plan involving a sale leaseback arrangement with a buyback option. He and his family are curently facing foreclosure and, reportedly, the FBI is investigating the arrangement as a possible scam.

For the story, see Fighting foreclosure.

Disbarred Attorney Indicted On Charges Of Pocketing $100K From Clients' Escrow Accounts

From the Queens County, New York district attorney:
  • Queens District Attorney Richard A. Brown announced [...] that a former Queens attorney has been arraigned on charges of looting the escrow accounts of several clients and failing to return over $100,000 that she had been holding on behalf of those clients.

***

  • District Attorney Brown said that, according to the indictment, [attorney Arelia] Taveras accepted $2,500 from a buyer as a contract deposit and an additional $22,500 as a down payment on a cooperative apartment in Bayside that she was selling. It is further alleged that the buyer’s application was subsequently denied by the cooperative board and that when she tried to get her deposit back Taveras refused to return the money.

  • In addition, according to the indictment, Taveras is accused of ripping off three clients [...] The indictment charges that Taveras failed to release $10,000 of the client’s money that was held in escrow. Another client was allegedly bilked of $40,000 stemming from the sale of commercial property. Taveras is accused of stealing $34,142 from a third client who allegedly retained her to represent him in connection with a divorce proceeding and a refinancing of his home.

For the Queens DA press release, see D.A. Brown: Disbarred Attorney Indicted On Charges Of Raiding Escrow Accounts And Stealing Over $100,000 From Clients. sneaky slick escrow agents gamma

Attorney Cops Guilty Plea, Disbarred After Being Nabbed Taking Kid-Client Escrow Cash To Avoid Foreclosure

In Charleston, West Virginia, The Charleston Gazette reports:
  • [O]n Nov. 12, the justices [of the West Virginia Supreme Court] revoked the law license of Anthony Tatano, a Marlinton lawyer who was admitted to the bar in 1999. In September, Tatano pleaded guilty to two counts of embezzlement by misuse of attorney in Pocahontas County Magistrate Court, according to court documents. In a sworn statement before an investigative panel, Tatano admitted he took funds from the accounts of two juvenile clients to avoid foreclosure on his house. [...] Tatano said he has since paid the money back.

For the story, see 3 lawyers have licenses revoked or annulled by Supreme Court. sneaky slick escrow agents gamma

Saturday, November 22, 2008

NY Regulator Warns Insurers To Stop Illegal Cancellations Of Homeowner Policies When House Is Unoccupied Or In Foreclosure

In New York City, Insurance Journal reports:
  • New York Department of Insurance has this advice for insurers in the Empire State: Stop canceling homeowners' policies simply because a house in unoccupied. That announcement came in the form a circular letter - essentially, an advisory bulletin to insurers - reiterating that cancellation of the policies solely on the basis of non-occupancy is illegal. The warning follows numerous complaints made to the department by consumers about cancellation notices.

***

  • The circular letter also reiterated that insurers may not use the existence of a foreclosure action as a basis to cancel a homeowners' insurance policy, since filings do not constitute a willful or reckless act or omission or increase the hazard of an insured property.

For more, see New York Warns Insurers about Some Homeowners' Cancellations.

Landlord Foreclosure Forces Tenant Family Of 10 Out Into The Cold

In Chicago, Illinois, WLS-TV Channel 7 reports:
  • The foreclosure crisis has forced a Chicago couple and their eight children into homelessness. [...] The Chambers family said they were renting in a [3-unit] building in Chicago's Lawndale community. They say they were forced to leave their home when it was abandoned by the landlord as it fell into foreclosure.

  • After the landlord walked away, [Antoinette] Chambers says the water pipes were stolen from the building, then the drug dealers showed and began to the occupy the porch area and a vacant apartment. "I tried to get some help from charity and the city and didn't get answers," Chambers said. Chambers says the city could not help because she was never served with official eviction papers.

  • To make matters worse, last week, Chambers sent some of her kids to their aunt's home in Englewood for a hot meal and place to sleep. Twelve-year-old Dishawn ended up being shot in the arm.

For the story, see Foreclosure forces family of 10 out of home.

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

North Carolina Family Loses Home To Foreclosure Due To Steep Decrease In Disability Benefits Attributed To Payment Error

In Davidson County, North Carolina, The Dispatch reports on the story of a local family who lost their home to foreclosure. Unlike those who lost homes through predatory loans, the family's loss has been attributed to a cut in their disability benefits that equated to a loss of half their income, leaving them unable to afford their mortgage payments. Social Security, claiming that it had overpaid benefits to the family by $8,000, abruptly cut the benefits until the amount was recouped. Attempts by the homeowner to work out an arrangement to reduce the future benefits in a way to allow them to repay the overpayment while allowing them to continue making the mortgage payments on their home failed.

For the story, see Forced out of home, family still asks why.

Foreclosures Force Central Florida HOA To Double Maintenance Fees; Fail to Give Residents Ample Notice

In Orange County, Florida, WKMG-TV Channel 6 reports:
  • The foreclosure crisis has forced a Central Florida homeowners association to double its rates to more than $1,200, causing neighborhood residents to research their legal options. About 20 percent of the properties in the Woodland Lakes Preserve neighborhood in east Orange County are in foreclosure, forcing the HOA to increase its rate by $662 to make up for the lost revenue.

  • Several residents told Local 6 News that they found out about the rate increase on Thursday. The bill is due Dec. 1.

For the story, see HOA Doubles Rates Amid Foreclosures (Residents Billed Extra $662).

Some Hawaii Real Estate Agents Steer Clear From Homeowners With Delinquent Mortgages As New State Foreclosure Rescue Law Has Long Reach

In Honolulu, Hawaii, Pacific Business News reports:
  • Some [Hawaii] real estate agents are refusing to take listings from homeowners who are behind in their mortgage payments and trying to avoid foreclosure because of a state law that was intended to protect consumers from predatory mortgage lenders.

***

  • The law(1) was intended to protect homeowners facing foreclosure from predatory “rescuers” looking to take advantage of their situation. Some real estate agents could fall under the definition of a “distressed property consultant,” which requires them to abide by a separate set of rules outlined in the law.

For more, see Anti-mortgage fraud law jams up Realtors.

(1) The Hawaii Mortgage Rescue Fraud Prevention Act, which took effect July 1, 2008.

Friday, November 21, 2008

Foreclosure Process Is "A Circus," Says Mass. Class Action Demanding Lenders Prove Note Ownership; Suit Seeks To Stop Current & Set Aside Past Sales

In Boston, Massachusetts, the Boston Herald reports:
  • A class action lawsuit has been filed that could stop hundreds of foreclosures and reverse thousands of others. “The rush to foreclose has turned the process into a circus,” said Gary Klein, an attorney representing two Boston homeowners facing foreclosure. "We’re asking these lenders to prove they hold the mortgage.”

  • The suit filed in Suffolk Superior Court alleges that since 2004 GMAC Mortgage, Deutsche Bank National Trust, Harmon Law Offices and Ablitt Law Offices foreclosed on properties despite the fact that they do not own or were not assigned the mortgages.

  • Klein estimates that as many as 1,000 homes in Massachusetts could be affected and thousands more going forward. If the lawsuit is successful, foreclosures in the pipeline would be placed on hold until lenders can prove they own the mortgage. If a foreclosure sale has taken place without the proper authority, it could be set aside.

For more, see Lawyer to lenders: Prove you own mortgages.

See also, The Boston Globe: Lenders' right to foreclose is challenged:

  • "Massachusetts' foreclosure process has become an undisciplined and lawless rush to seize homes," the suit alleged. "Many thousands of foreclosures are plainly void under statute and settled Massachusetts case law."

For posts that reference the failure of some mortgage lenders and their attorneys to prove ownership of the promissory note when starting foreclosure actions, Go Here, Go Here, Go Here, and Go Here. missing mortgage foreclosure docs gamma

Fannie, Freddie Call For Temporary Halt Of Its Foreclosures, Evictions

Bloomberg News reports:
  • Fannie Mae and Freddie Mac, the mortgage-finance companies seized by the U.S. government, will suspend foreclosures and evictions over the holidays. The six-week halt will begin Nov. 26, a day before the U.S. Thanksgiving holiday, and last through Jan. 9, the companies said in separate statements today. The hiatus is designed to give servicers more time to implement a streamlined loan modification program for struggling borrowers.

For more, see Fannie, Freddie Suspend Foreclosures Through Jan. 9.

Tennessee AG, MALS Tag Another Upfront Fee Foreclosure Rescue Operator With Lawsuits

From the Office of the Tennessee Attorney General:
  • Tennessee Attorney General Bob Cooper filed suit [Tuesday] to stop another Tennessee foreclosure rescue company and its principal from charging service fees to consumers and then failing to follow through with the services promised. The lawsuit filed [Tuesday] alleges violations of consumer protection laws.(1)

***

  • The State’s complaint, which was filed in Shelby County Chancery Court, also alleges violations of the Tennessee unauthorized practice of law statutes(2) and the Tennessee Credit Services Businesses Act.

For the AG's press release, see Attorney General Files Suit Against Tennessee Foreclosure Rescue Company, Requests Asset Freeze, Halt To Alleged Unlawful Activities.

For legal documents in this case, see:

See also, Eyewitness News ABC24-CW30: Scammed into Foreclosure.

(1) According to the AG's press release, Attorney General Cooper on behalf of Mary Clement, director of the Division of Consumer Affairs, sued Patrick & Patrick, LLC doing business as Patrick & Patrick Loss Mitigation Services, and its principal, Denise Patrick, also known as Sondrette D. Patrick. The defendants are also doing business via the Internet at www.patrickandpatricklm.com. (Note: At some point after this story came out, the firm took down their website.

(2) Bringing charges of unauthorized practice of law against upfront fee loan modification / foreclosure rescue operators appears to be gaining steam - the Florida Attorney General reportedly made similar allegations in a recent lawsuit brought against a loan modification company. Go here and go here for other posts on issues relating to attorneys, loan modifications, and the unlicensed/unauthorized practice of law.

(3) Last month, the Tennessee Attorney General's office and Memphis Area Legal Services also filed multiple lawsuits against another upfront fee foreclosure rescue operator, according to this press release. UnauthPractOfLawKappa

Fee-Based Loan Modification Firms Require State Mortgage Brokerage License When Working With Colorado Homeowners, Says State Regulator

In Denver, Colorado, the Rocky Mountain News reports:
  • Only licensed mortgage brokers may provide home loan modifications in Colorado under the new Mortgage Broker Licensing Law, the Colorado Division of Real Estate reminded consumers on Wednesday.(1) The reminder came because of the increased number of complaints the division has received about loan modification companies.

For more, see Loan modifications require mortgage broker license.

See also, The Denver Post: Modified- loan services face scrutiny:

  • "We are getting a considerable number of complaints from homeowners who are being charged high fees with no results," said Zachary Urban, division spokesman. [...] Struggling homeowners are paying $4,000 to $6,000 upfront and not receiving the services that were promised, Urban said.

Go here for the recently enunciated Colorado Division of Real Estate Position Statement on Loan Modifications.

(1) Loan modification companies purporting to assist homeowners in backing out of bad loans by analyzing mortgage documents to find errors committed by lenders in violation of Federal and state lending and consumer protection laws may also need a law license in the states they are operating in, judging by legal actions against such firms alleging, among other things, the unauthorized practice of law recently brought in a TennesseeAttorney General lawsuit, and a Florida Attorney General lawsuit.

Go here and go here for other posts on issues relating to attorneys, loan modifications, and the unlicensed/unauthorized practice of law. ColoradoLoanModificationalpha

Unsatisfied Customer Of Loan Modification Firm Is Out $1,300, Tells Her Story

In Allentown, Pennsylvania, The Morning Call reports:
  • Susan Wood needed help. She fell behind on her mortgage and her Allentown home was going to be sold at sheriff's sale. [...] Thinking she lacked the power to renegotiate with her mortgage holder personally, Wood accepted an offer of help from Uoninc of Wilkes-Barre.

  • It bills itself as a ''loss mitigation'' firm, but Wood lost money by hiring it. A year later, her mortgage has been reworked, but not by Uoninc. The company did contact Countrywide about a loan modification. But when it came time to close the deal, Wood said, Uoninc disappeared with her money. Wood missed the spring deadline, then renegotiated with Countrywide on her own in August.

***

  • Wood feels she didn't get anything for the $500 she paid Uoninc. And she still hasn't received a refund of $800 in ''escrow'' money she paid the firm. Wood was told Uoninc needed that for closing costs.

For more, see Mortgage 'help' only dug the hole deeper.

Bogus Loan Modification Firms Popping Up In Nevada, State Regulator Warns

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:
  • The state of Nevada is warning homeowners to beware of bogus loan modification specialists that have popped up with the foreclosure crisis. The Nevada Division of Mortgage Lending says it has received numerous complaints about "loan modification companies" that offer unrealistic loan modification options to unsuspecting borrowers and then end up charging them excessive fees while the borrower can often get these services for free.

Source: SCAM: Beware of Bogus Loan Modification Specialists.

Las Vegas Man Pleads Guilty In Foreclosure Rescue, Transfer Tax Evasion Schemes

In Las Vegas, Nevada, the Las Vegas Sun reports:
  • A 64-year-old Las Vegas man, Mathew Marion, pleaded guilty [Thursday] morning to a mortgage fraud scam. [...] The investigation revealed that between July 2007 and November 2007, Marion falsely told homeowners facing foreclosure that he would buy their houses and land in Clark County for a price that equaled the sum of the outstanding mortgages, together with a small cash payment, and promised that he would pay off the mortgages to prevent the properties from going into foreclosure.

Reportedly, the investigation also uncovered a scheme designed to allow Marion to conceal his identity and avoid paying transfer taxes to the county.(1)

For more, see Las Vegas man pleads guilty to mortgage loan scam.

For the Nevada Attorney General press release, see Attorney General Announces Guilty Plea In Mortgage Loan Scam.

(1) According to the story, Marion was sentenced to pay a $20,000 fine to the state and ordered that he pay restitution to Clark County of $89,990.60 for property transfer taxes that were owed on properties. He was also ordered to pay restitution to the victim homeowners in the amount of $43,009.40. The total restitution payment is $130,000. He reportedly pleaded guilty to nine gross misdemeanor counts of making false representations on titles and one count of gross misdemeanor of making a fraudulent conveyance in connection with a mortgage foreclosure rescue scam, Nevada Attorney General Catherine Cortez Masto said.

Arizona Refinancing Scam Leaves Elderly Woman Facing Loss Of Home Of 45 Years; Court Orders $343K+ In Restitution To Four Seniors

From the Arizona Attorney General:
  • Attorney General Terry Goddard [...] announced that a Phoenix mortgage broker has been sentenced to prison for operating a residential mortgage scam that defrauded four Phoenix seniors of more than $400,000.

***

  • According to court documents, [Rick Thomas] McCullough was the president of licensed mortgage broker CactusCash, Inc. In 2005 and 2006, he used this position to persuade four seniors, two single women and one couple, to refinance their homes through him for amounts far greater than the balance of their existing mortgages.

  • McCullough also convinced all four victims to invest their net refinancing proceeds with him, effectively obtaining for himself much of the equity that these elderly clients had in their homes. McCullough claimed that he would invest the victims’ funds in real estate and personally guaranteed the loans. [...] In fact, McCullough used the money to make personal purchases, including a $42,000 ring for his wife.

***

  • "Because of this vicious scheme, an elderly woman may lose her home of 45 years and a 65-year-old victim must choose between a needed surgery and making the new mortgage payment," said Goddard.

For the Arizona AG press release, see Phoenix Mortgage Broker Who Defrauded Seniors Gets Prison Term.

Thursday, November 20, 2008

Elderly Blind Woman Threatened With Lien On Home Over 1 Cent Underpayment On Water, Sewer Charges; Benefactor Steps Forward To Cut Check, Save The Day

In Attleboro, Massachusetts, The Boston Globe reports:
  • When her daughter read her the notice, Eileen Wilbur began to sweat. Her heart raced; her blood pressure climbed. The 73-year-old blind woman could not believe that Attleboro City Hall was threatening to impose a lien of up to $48 because she had mistakenly underpaid her last water and sewer bill by a penny. She couldn't fathom why the city would pay 42 cents for a stamp to collect a penny.

For more, see Short a penny on bill, blind Attleboro woman threatened with lien (News generates outcry, generosity).

Alleged Long Island Foreclosure Rescue, Equity Stripping Scammers Among 16 Included In Two Federal Fraud Indictments

In Nassau and Suffolk County, New York, Newsday reports:
  • [F]ederal officials yesterday arrested 16 people who they said were involved in two multimillion-dollar Long Island mortgage fraud schemes, including one suspected of being tied to a drug distribution ring. The schemes are believed by investigators to have bilked lenders of a total of $13.9 million through finance companies in both Nassau and Suffolk counties.

  • Those arrested [in the alleged foreclosure rescue, equity stripping scheme] included Robert Guerrero, 33, who Brooklyn federal prosecutors said controlled Property Cash Inc. of Greenlawn. According to an indictment unsealed yesterday, Property Cash was nominally in the name of his girlfriend, Alison Edelman, 30, who was also charged. Federal agents also arrested Gary Jacques, 33, who according to court papers controlled Home Cash Inc. of Huntington Station.(1)

  • According to the indictment, Guerrero and Jacques used straw buyers with good credit to fraudulently obtain mortgages to pay for homes in Huntington, Greenlawn, Bay Shore and Uniondale at inflated prices.

  • Guerrero and Jacques gained control of the properties through use of a "foreclosure rescue scheme" in which they promised homeowners in danger of defaulting on their mortgages that they could sign their properties over to Home Cash or Property Cash, a method that stole the equity, the indictment charged.

  • The various straw buyers, who were paid up to $10,000 for their participation, had their credit inflated by Guerrero and Jacques, the indictment stated. Once Guerrero and Jacques got the properties, they flipped them at prices inflated with the help of licensed appraisers, prosecutors charged. The scheme lost lenders $8.8 million, prosecutors said.

For more, including the details of the second alleged mortgage fraud case, see Feds accuse 16 in LI mortgage fraud schemes.

See also:

(1) According to the U.S. Attorney press release, those charged in this alleged scam are: LAWRENCE ALBERS, 51; AL CASSIANO JR., 41; ALISON EDELMAN, 30; RONY PHILIPPE EXANTUS, 45; ROBERT ALEXANDER GUERRERO, 33; VICTOR GUERRERO, 35; ANSY GUERRIER, 29; GARY JACQUES, 33; JEFFREY JACQUES, 25; MICHAEL McENROE, 37; JOHANNY MENDEZ, 26; SANDRA SAM, 44.

Queens DA Indicts Nine In Alleged Straw Buyer Scam Using Fake Identities To Fradulently Flip Homes; Widow Has Home Sold Out From Under Her

In Jamaica, Queens, the New York Daily News reports:
  • An accused sex tour operator and a high-ranking Brooklyn court official were among nine people indicted Tuesday in a $1.4 million mortgage fraud scheme that featured stolen identities and an elaborate series of masquerades.(1) In the scheme, con artists using fake IDs to conceal their participation bought and sold two Queens properties and one in Brooklyn and then took out the mortgages, authorities said.

***

  • The victims included a Jamaica woman who owned her home outright and now faces foreclosure; and a New Jersey woman, whose identity was stolen and is now fighting off banks over mortgages fraudulently taken out in her name, said [Queens District Attorney Richard] Brown.

In addition to the accused sex tour operator (who is also a certified public accountant) and the now-chief deputy county clerk for Kings County (an attorney who, prior to taking his current position, was in private practice at the time of the alleged bad acts and, according to this New York Post article, the brother of a Brooklyn trial judge), a disbarred attorney who allegedly handled all the closings of the transactions involved was also among the indicted, a Queens DA press release said.

For more, see Court clerk indicted in mortgage scam.

See also:

(1) According to a Queens district attorney press release, those charged are Norman Barabash, 63, Bellerose; Shamim, a.k.a. Sam, Choudhury, 35, Jamaica, N.Y.; Gulam, a.k.a. Zack, Chowdhury, 22, Lawrence; John D’Emic, 59, Brooklyn; Daisy Guzman-Saavedra, 38, Yorktown Heights; Nazrul Islam, 23, Jamaica, N.Y.; Alan Morris, 58, New Hyde Park, N.Y.; Boris Nektalov, 23, Flushing; Rajendar Persaud, a.k.a., Rommel Persaud, 35, Verbank, N.Y.

Central Florida Foreclosure Conciliation Program Begins In December

In Central Florida, the Bradenton Herald reports:

  • With foreclosure cases swamping local courts, the area’s top judge is planning a novel approach: Forcing lenders to talk with borrowers. Saying he wants to break “the wall of silence” between lenders and homeowners, 12th Circuit Chief Judge Lee Haworth soon will require them to discuss possible ways of avoiding foreclosure before it actually happens.

  • Forcing the parties to slow down and discuss possible solutions is a good thing,” he said Monday. The new Homestead Foreclosure Conciliation Program likely is the first of its kind in Florida, Haworth said. The program applies to foreclosure suits filed on or after Dec. 1 against homesteaded residential properties in Manatee, Sarasota and DeSoto counties.

For more, see Local judge says borrowers, lenders must see eye to eye.

Go here for more on Florida's 12th Circuit Homestead Foreclosure Conciliation Program:

Go here for other posts on the foreclosure mediation program in Florida's 12th Judicial Circuit (Manatee, Sarasota, and Desoto Counties).

Feds Indict Two In "Cash Back" Flipping Scam; Biggest Mortgage Fraud Scheme To Ever Hit SE Missouri, Says Prosecutor

In Cape Girardeau, Missouri, KFVS-TV Channel 12 reports:
  • Two men are accused in what the U.S. Attorney calls the biggest mortgage fraud scheme ever to hit southeast Missouri.

***

  • [Todd] McBride and [Bob] Wrolstad are accused of recruiting investors through Century Mortgage. At the same time, the two men allegedly picked up properties on Sikeston's west side, got inflated appraisals on them and then arranged for bank loans based on those phony appraisals. McBride and Wrolstad then allegedly sold the overvalued properties to the investors and directed the mortgage loan money straight into their personal bank accounts.

For more, see Housejacked: Men Charged in Mortgage Scheme in Federal Court.

From the U.S. Attorney's Office (Eastern District - Missouri):

Go here for earlier posts on KFVS-TV "Housejacking" Investigation.

WaMu, Freddie Mix-Up Lands Foreclosed Homeowner On The Street Without Formal Eviction

In Tampa, Florida, The Tampa Tribune reports on a homeowner in foreclosure who, while in the process of attempting a loan workout with Washington Mutual Bank, found that the locks on her home had been changed, her belongings were gone, and the lawn and windows were blanketed with realty signs advertising the home for sale.
  • It turns out the lender [homeowner Natalie] Fuentes had been dealing with no longer owned her loan. Without her knowledge, it had been sold to mortgage finance giant Freddie Mac. Washington Mutual remained the servicer of the loan. In a surprise to both Fuentes and the Washington Mutual officials she was working with, Freddie had moved forward with selling the home.

For more, see Who Owns Your Loan? It's Time To Find Out.

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

Wednesday, November 19, 2008

Illinois AG Continues Putting The Hammer On Upfront Fee Foreclosure Rescue Operators As Seven More Lawsuits Are Filed

From the Office of the Illinois Attorney General:
  • Attorney General Lisa Madigan [yesterday] announced that she has filed seven new lawsuits(1) against so-called mortgage “rescue” companies and warned consumers about an alarming rise in these scams that prey on vulnerable homeowners on the verge of foreclosure.

***

  • In each of the lawsuits filed late [Monday], Madigan alleges that con artists targeted homeowners who have fallen behind on their mortgage payments and promised that, for an upfront fee, the scammers could negotiate with the mortgage lenders to reduce the payments and save their homes.

  • However, according to Madigan’s complaints, after these “consultants” collected the upfront fees, they failed to negotiate or perform any services on behalf of the homeowners, leaving consumers at risk of losing their homes to foreclosure.

  • This tactic violates Illinois’ Mortgage Rescue Fraud Act, which prohibits mortgage rescue companies from requiring payment from consumers prior to completing all the terms of a rescue contract. [...] With these new filings, Madigan has brought lawsuits against 22 mortgage rescue fraud companies.

For more, see Madigan Sues Seven Companies For Mortgage Rescue Fraud (Attorney General Urges Consumers to Resist “Rescue” Schemes and Seek Reputable Assistance).

(1) Those companies sued, according to the Illinois AG press release (and links to copies of the lawsuits), are:

Colorado AG Foreclosure Rescue Crackdown Hits 15 Firms

In Denver, Colorado, the Rocky Mountain News reports:
  • [Colorado Attorney General John] Suthers [...] said he has taken action to protect homeowners who are in foreclosure from “rescue” firms that are not following Colorado’s Foreclosure Protection Act, which he supported and saw passed during the 2006 legislative session. So far, his office cease and desist agreements with 15 companies to prevent them from operating in Colorado until they follow this law.(1)

  • Many distressed homeowners in foreclosure are bombarded with solicitations from companies that offer to help save their homes. Under the Foreclosure Protection Act, homeowners enjoy many protections against abusive tactics. Rescue firms cannot accept an upfront fee and must provide the homeowner with a contract that specifies the services to be performed. Rescue firms are also prohibited from taking a lien or interest in the title to the home unless they provide certain disclosures.

For more, see Suthers cracks down on mortgage fraud.

(1) Under the cease and Desist agreements, seven rescue firms have agreed to cease operations in Colorado until they comes into compliance with the Foreclosure Protection Act. Companies that have agreed to cease & desist during 2008 include: Crisis Management, LLC, in Glendale, Arizona; Davis Foreclosure Assistance, Englewood, N.J. Debt Advocacy Center; Cleveland; Franklin Equity, Santa Ana, Calif.; HomeAssure, New York, N.Y.; National Foreclosure Counseling Servicesl Jacksonville, Fla.; and New Hope Modifications, Bellmawr, N.J. An additional eight companies have previously reached cease and desist agreements with the attorney general since the Foreclosure Protection Act was enacted, including one Colorado company, Denver Home Rescue. ColoradoLoanModificationalpha

Maryland State Lawmaker's Bankruptcy Filing Stalls Completion Of Sale Leaseback, Foreclosure Rescue Court Case

In Annapolis, Maryland, The Capital reports:
  • Del. Tony McConkey filed for bankruptcy [Monday], delaying a jury trial that was set to begin today in a civil case in which he is accused of scamming a woman out of her home. A judge ruled in September that the Severna Park Republican violated state law when he bought the home of a Pasadena woman facing foreclosure.

  • The jury was set to rule on additional allegations of fraud, misrepresentation and determine final damages, but Mr. McConkey's bankruptcy filing puts a halt to that process. He filed for bankruptcy under Chapter 7 yesterday in U.S. Bankruptcy Court of Maryland.

***

  • Circuit Court Judge D. William Sampson ruled in September that Mr. McConkey violated the Protection of Homeowners in Foreclosure Act [Sec. 7-301 to 7-325] in 2006 by acting as a foreclosure consultant to Ms. [Teresa] Milligan and then buying her home. Judge Sampson declared Mr. McConkey's deed to the house null and void, but did not decide how much Ms. Milligan should receive in damages.

For more, see McConkey's bankruptcy filing delays foreclosure case.

See also, WBAL-TV Channel 11: Delegate Facing Lawsuit Files For Bankruptcy (Delegate Accused In Foreclosure Fraud Scheme).

Loan Modification Firm Renegs On Money-Back Guarantee, Say Customers, Company Sales Rep

In San Diego, California, KGTV-TV Channel 10 recently ran a story in which it interviewed two unsatisfied customers and a former sales representative of a local company that reportedly took upfront fees (about $4,000) in exchange for money-back guaranteed promises to help lower loan payments, principal amounts on loans, and interest rates on the customers' home mortgages.

According to the story, the firm failed on its promises to the two customers, the customers haven't gotten their refunds, the sales rep quit after a couple of his clients didn't receive their promised refunds, and court records show the company has been already been sued by dissatisfied customers.

For more, see Company Accused Of Using Housing Crisis For Profit, and the Channel 10 I-Team Investigation blog on People’s First Financial.

Go here for the KGTV Channel 10 video report.

S. California Group Claiming "Sovereign" Immunity From Laws Seize Vacant Foreclosures & Rent Them Out, Leaving Authorities Scratching Their Heads

In Southern California, The Press Enterprise reports on a local outfit claiming to be a religious orgainization with "soverieign" immunity from federal and local laws that, according to some local real estate agents, is going around seizing vacant foreclosed houses by recording legitimate looking deeds with the county recorder, and then turning around and renting the vacant homes to squatters.

For the story, see Would-be homebuyers find themselves in ownership limbo.

For story update, see San Diego Union Tribune: Man accused of filing bogus grant deeds pleads not guilty.

Tuesday, November 18, 2008

Investors In Countrywide MBS Cry Foul In Bank Of America $8.4B Loan Modification Settlement With State AGs

The Wall Street Journal reports:
  • Bank of America Corp.'s decision to embark on an $8.4 billion home-loan-modification program to settle charges brought by state attorneys general against Countrywide Financial Corp. was hailed as a milestone when the deal was announced this fall. But apparently nobody talked to one group that will shoulder much of the settlement's costs: investors who hold securities backed by Countrywide mortgages.

***

  • Bank of America didn't seek investor approval before agreeing to the settlement "because the design of the program was based in large part on the delegated authority" in the contracts, [a Bank of America spokesman said].

  • But some investors believe they should have been contacted first. [...] Other investors said Bank of America is moving much of the cost of the settlement to investors when it should be paying those costs itself. [... T]hey said that many of these loans violated representations and warranties made when the mortgages were packaged into securities. As a result, they said, Bank of America should repurchase the loans before modifying them.

  • "This is literally an attempt to settle a dispute with state attorneys general on predatory lending claims with someone else's money," said one money manager. "In 10-plus years in the market, I've never seen anything as outrageous as this."

For more, see Investors Hit BofA Loan Modifications.

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

Hawaii Feds Probe Alleged "Bogus Bond" Foreclosure Rescue Scam; Homeowners Clipped Out Of $300K+

In Hawaii, The Honolulu Advertiser reports:
  • The FBI is investigating several local companies that allegedly bilked homeowners out of more than $300,000 on O'ahu, the Big Island and Maui with false promises to help them avoid foreclosure, according to local lenders and law enforcement officials.

  • The families, many of which are Native Hawaiian, were charged between $2,500 and $10,000 to attend seminars or counseling sessions on avoiding foreclosure, and were told they would receive bonds worth $1 million(1) that could be used to pay off the outstanding balance of the mortgage. Officials said the bonds were bogus and no mortgages were paid off.

For more, see Homeowners targets of scam (Bogus bonds sold as mortgage relief landed many in foreclosure).

See also:

(1) According to the story, after attending the seminars, families are told that a $1 million "Royal Hawaiian Treasury Bond" will be sent to the homeowners' bank with a letter explaining that it will cover the outstanding balance of the mortgage. The companies tell the homeowner that because they are members of the "Hawaiian nation," the bank will no longer be able to demand money from them because they are the land's "rightful owners," the story states.

N. Virginia Man Cops Plea In Fraud Case; Allegedly Pocketed Refinancing Proceeds Intended To Pay Off Existing Liens, Sold Same Loans Multiple Times

From the U.S. Attorney's Office (Eastern District - Virginia):
  • Vijay K. Taneja, age 47, of Fairfax, Virginia, pleaded guilty to one count of conspiracy to commit money laundering in connection with a mortgage fraud scheme involving his company, Financial Mortgage, Inc., (“FMI”), which originated and sold mortgages on residential properties in the Washington, D.C., metropolitan area.

According to the press release, the allegations against Taneja contained in court documents supporting the guilty plea include:

  1. creating fictitious loans with bogus loan closings,
  2. selling the same legitimate loan to multiple investors, and
  3. pocketing the proceeds generated from refinancing loans, when the bulk of those proceeds were intended to payoff prior mortgages on the same properties.

Court documents also state that for at least part of the scheme, Taneja conspired with the owner of TitlePro, a now-defunct Fairfax, Virginia title company, the press release states.

For the U.S. Attorney's press release, see Fairfax Man Pleaded Guilty in $33 Million Mortgage Fraud Case.

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

Upstate NY Developer Faces Felonies For Allegedly Using Buyers' Deposits For Costs Unrelated To Building Their Homes

In Saratoga Springs, New York, the Schenectady Gazette reports on once-thriving homebuilder James McLagan who, once the real estate market tanked, now finds himself facing six felony grand larceny counts and a misdemeanor charge of scheming to fraud along with a number of civil lawsuits:
  • [P]ublic records show that McLagan’s mortgage company and other creditors say he stopped paying his bills sometime last year, after he had already racked up hundreds of thousands of dollars in mechanic’s liens from contractors and creditors.

  • That may mean he used housing deposits from customers to pay other bills rather than for supplies and contractor labor costs for their houses, which is illegal, [Saratoga County District Attorney James Murphy III] said.

  • In these particular criminal charges, we’re alleging that he intentionally stole money and didn’t use the money he was given by the homeowner for materials or products that were to be used specifically in the home that was being built,” he said.

  • [DA Investigator Rich] Martin noted that state law requires builders who take money up front to put it into an escrow account and only draw on it for expenses for that home.

For more, see Boom times over for arrested developer.

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

Should You Keep Paying Your Mortgage?

A recent column in the San Francisco Chronicle discussed the possibility of homeowners deciding to stiff their lenders in order to qualify for one of the bailout programs that are currently being floated.
  • Should you keep paying your mortgage? If you have significant equity in your home, absolutely. If you don't, it's getting harder to answer that question, especially when our government keeps giving people who owe more than their homes are worth so many reasons not to pay.

***

  • Peter Schiff, president of Euro Pacific Capital, predicts that many homeowners who have little or no equity will stop paying their mortgage and then reduce their income to get the biggest payment cut possible. They could stop working overtime or, if two spouses work, one could quit. After the modification, they could try to boost their income again.

  • "This is a once-in-a-lifetime opportunity," Schiff says. "People are going to feel like complete morons if they don't participate. The people getting punished are the ones who never made an irresponsible decision to buy a house they couldn't afford."

***

  • Schiff predicts that loan agents "will be cold-calling people trying to get them into it. Just like they encouraged people to overstate their income to get a bigger loan in the first place, now they will encourage them to understate their income to qualify for a smaller loan."

For more, see Are you an idiot to keep paying your mortgage?