Thursday, November 27, 2008

Some Real Estate Agents Now Arming Themselves To Protect Against Dangers Of Selling Vacant Foreclosures

In Merced, California, KFSN-TV Channel 30 reports:
  • The foreclosure crisis has left thousands of homes throughout the Central Valley in ruins and some realtors are running into trouble when they try to sell foreclosed homes. Graffiti and garbage aren't the only things realtors now find when they enter foreclosed homes.

  • "Several times I've walked up and there's unsavory folks in the house who don't belong there, and it's frightening. It's dangerous," said Merced County Realtor Andy Krotik. That's why he said he's applying for a concealed weapons permit, and he's not alone. "I've got several colleagues who are also in the business that work with bank owned properties who either have their concealed weapons permit or are in the process of getting one, for the same reason, we all fear for our safety."

For more, see Foreclosure Leaves Homes in Ruin.

In related stories, see:

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

Abandoned Property Dangers Move Town Officials To Post Signs Warning Fire Responders Of Hazardous Homes

In the MetroWest region of Massachusetts, The MetroWest Daily News reports:
  • As the staggering economy leads to more foreclosures, local officials are left to deal with the problem of keeping the empty homes from becoming eyesores and safety hazards.

***

  • The insides of some homes are so torn apart that [Marlborough's code enforcement officer Pamela] Wilderman worries about firefighters who might answer calls. As a result, the city identified about 25 hazardous properties where it has put up signs on the outside that warn responders to enter with extreme caution. Wilderman went around with Deputy Fire Chief Ron Ayotte for a full day putting up the warning signs.

For more, see Empty homes a danger to fire fighters and a nuisance to officials. BetaVacantForeclosure

Central Indiana's Abandoned Home Problem At Crisis Proportions; Lender Inaction Leaves Some Properties In Legal Limbo

In Indianapolis, Indiana, WTHR-TV Channel 13 reports:
  • From starter homes in Greenwood to million-dollar mansions in Geist, tens of thousands of homes throughout central Indiana are now vacant, abandoned or in foreclosure. While some of the properties are being well maintained, most are not.

***

  • 13 Investigates' tour of abandoned homes found properties that have been ransacked and vandalized. Others have collapsed ceilings. Rotten food, mold and mildew create foul odors that neighbors call "unbearable."

***

  • In the past two years, the Marion County Health Department has seen a 30% increase in unsafe housing complaints, largely fueled by the recent foreclosure crisis that has prompted many families to give up their homes. [... I]n some situations, 13 Investigates has learned banks and mortgage companies take no action on abandoned properties, leaving both the city and neighbors in a legal limbo.

The existing unsafe conditions in some of the homes is highlighted by caved-in ceilings, the proliferation of toxic black mold, the presence of dead animals inside the homes, and the death of a five year old child, who reportedly drowned in an unsecured pool of a vacant, foreclosed home.

For more, see Foreclosed and forgotten (read story) (watch WTHR Channel 13 video).

Go here, Go here, Go here, Go here, and Go here for posts on vacant homes leaving their mark on neighborhoods.

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

Wednesday, November 26, 2008

Mortgage Audit Services Offered To Homeowners In Financial Trouble

The Boston Herald recently ran a story on the mortgage audit industry, a group that is offering their services to homeowners in trouble with their mortgages:
  • [M]ortgage auditors review customers’ loan papers for forged signatures, sham home appraisals or other illegal acts. Any wrongdoing can strengthen financially strapped homeowners’ hands in negotiations with lenders.

  • Many customers are seeking “loan modifications,” where banks agree to cut homeowners’ interest rate or otherwise change mortgage terms to help homeowners avoid foreclosure. Others want lenders to OK “short sales,” where borrowers sell homes in today’s weak market for less than their unpaid mortgage balances and banks simply “eat” the difference.

***

  • Common flaws include math errors on federal Truth in Lending Act forms, which by law must accurately list a mortgage’s total lifetime cost within $35. While such mistakes can seem minor, they often give homeowners just enough leverage to get out of fraudulent loans.

Reportedly, one firm featured in the story performs about 100 checks on each customer’s loan, producing five- to 15-page reports and charging about $350 to $600.

For more, see Mortgage ’auditors’ help people fight foreclosure. missing mortgage foreclosure docs gamma UndoMortgageLoans TILAdelta

Are Lenders Proactively Offering Borrowers Cash In Exchange For Waiving TILA Violations?

An "Ask The Lawyer" Q & A article appearing last month in the Atlanta Journal Constitution posed the following question:
  • I received a letter from my lender stating that a Truth in Lending Disclosure Statement was not prepared and provided to me prior to closing my loan. I was sent forms to sign and was told that I would be sent $250, for my inconvenience when the forms were completed and returned. Is my lender buying me off for a measly $250? Can I get more? Isn’t it a pretty big offense to not provide the Truth in Lending Disclosure?

For more, see Settle for $250, or go for a possible $1,000 (Latter payoff for lender’s failure to provide form less likely, bigger hassle). missing mortgage foreclosure docs gamma

Chicago Apartment Building Converted To Condominiums Without Notice To Tenants At Center Of Straw Buyer Mortgage Fraud Probe

In Chicago, Illinois, the Chi-Town Daily News reports:
  • A state agency today revoked the Illinois licenses of two mortgage companies and filed complaints against an appraiser and a real estate company in connection with a mortgage fraud investigation at a West Side residential building.

  • The Daily News reported last week that tenants at 2754 W. Washington Blvd. suspect their apartments were sold to straw buyers by the building's former owner. The tenants say they remain unclear as to who actually owns the building, have stopped paying rent, and have banded together to take care of the building's utilities and maintenance.

For more, see State moves against mortgage companies at W. Side building.

See also:

Felonious Rent Skimming, Foreclosure Fraud Charges In Alleged Land Grant "Rescue" Scam Ruled Constitutional, Says California Judge

In San Diego, California, CW Channel 6 reports:
  • Felony civil code violations alleging rent skimming and foreclosure fraud against five people accused of victimizing hundreds of San Diego County homeowners are constitutional, a judge ruled Friday.(1) [...] The defendants face a total of 172 charges, including conspiracy and grand theft.

***

  • At a hearing in May, Deputy District Attorney Stephen Robinson alleged that the defendants offered to help homeowners keep their property by placing them in "land grants," when in fact the transactions were bogus and left them even worse off than they were before.

For more, see Foreclosure Fraud Charges.

Go here for more on this alleged Southern California land grant, foreclosure rescue scam.

(1) According to the story, Superior Court Judge Charles Rogers denied a legal challenge to the charges against William Hutchings, 62, and his wife Xiaoke Li, 45; Shawna Landis, 36; Diego Gil, age unknown, and Edgar Martinez, 30.

Las Vegas Family Of Four Gets Screwed Over In Lease-Purchase Of Home In Foreclosure

In Las Vegas, Nevada, the Las Vegas Review Journal recently reported the story of a family of four who had relocated from Hawaii, and who had entered into a lease-purchase agreement for the purchase of the family home. Unbeknownst to the family, the home was in foreclosure.

For the rest of the story, see THE FACES OF HARD TIMES: 'We put our trust in people' (Alleged scam involving lease-purchase of foreclosed home sends family back to Hawaii). ThetaTenantRentSkimming rent to own lease purchase option scams yellowstone

Tuesday, November 25, 2008

Brooklyn "Fight Foreclosure" Free Legal Seminar

From the Brooklyn Daily Eagle:

  • Tues.-Wed. Dec. 2-3, Free CLE/Workshop: Foreclosure Prevention Law, 9:30 a.m.-4 p.m. Topics: Subprime and exotic mortgage markets; federal and state claims for foreclosure prevention; litigation practice; loan workout strategies and options; foreclosure prevention resources. Mandatory for all Center for New York City Neighborhoods (CNYCN).

  • CLE accreditation pending. Held at the Brooklyn Bar Association, 123 Remsen St. Free. Pre-registration required. For information contact NEDAP: (212) 680-5100. To register, contact CNYCN: info@cnycn.org, or (212) 566-3050 x2.

Source: Free CLE/Workshop: Foreclosure Prevention Law.

Lender Forks Over $11M To Settle False Claims Act Charges With Illinois Feds; Allegedly Gave False Info On 219 FHA Loans That Ended Up In Foreclosure

In Chicago, Illinois, Reuters reports:
  • A Royal Bank of Canada mortgage unit will pay $10.98 million to settle charges it gave the U.S. government false information about borrowers who took out 219 home loans that ended up in foreclosure.

  • RBC Mortgage Co agreed to the payment to avoid litigation but denied wrongdoing, according to Patrick Fitzgerald, the U.S. attorney in Chicago, who announced the settlement.

***

  • The civil case is related to a separate federal criminal probe that resulted in the convictions of 25 defendants, including three RBC Mortgage officers, Fitzgerald said.

For more, see RBC pays $11 mln to settle US mortgage fraud probe.

From the Office of the U.S. Attorney (Chicago):

Lack Of Legal Standing Apparently Not A Concern To Some Foreclosing Lenders; Would Rather Play The Odds That Homeowners Won't Contest Legal Actions

Buried in a recent article in the Connecticut Law Tribune is this excerpt, which may reflect the arrogance of some mortgage lenders and their general contempt for the legal system when bringing foreclosure actions against homeowners even though they lack the legal standing to do so:
  • [Attorney Patrick] Begos’ firm [Begos, Horgan & Brown] has attempted to carve out a niche with banks to review their troubled loans and to ensure that the banks had standing to file foreclosure proceedings.

  • Earlier this year, firm member Christopher Brown got a case against his homeowner client dismissed in New Haven Superior Court because Brown showed that the plaintiff mortgage company couldn’t prove it held the mortgage at the time it filed suit.(1)

  • Despite that outcome, banks didn’t bite on Begos’s pitch, telling him that they would rather play the odds that most homeowners won’t contest foreclosures in court.(2)

Source: Adapting On The Fly (Solos, small firms make quick changes in bad economy).

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.

(1) See Connecticut Law Tribune: Shaky Standing (Foreclosure cases identify shoddy record-keeping in mortgage industry).

(2) Even if the homeowners fail to contest foreclosures, a lender's lack of legal standing in bringing an action leaves open a possible future attack that the foreclosure judgment obtained in a court that lacked jurisdiction is void, thereby raising the possibility that judgments obtained and foreclosure sales that have already taken place could be voided or otherwise set aside. Reportedly, the issue of void foreclosures where lenders allegedly lacked legal standing has recently been raised in a Massachusetts lawsuit. The suit seeks to set aside past foreclosures involving two lenders, halt any actions they currently have in the pipeline, and seeks class action status. See Thousands Of Foreclosures Are Void, Says Massachusetts Class Action Demanding Lenders & Their Lawyers Prove Note Ownership. missing mortgage foreclosure docs gamma

Loan Modification Firms Swarm Courthouses To Find Leads; Cash-Strapped Homeowners Find Mailboxes Stuffed With Junk Mail, Salespeople On Doorstep

A recent editorial in The New York Times makes this observation:
  • The demise of the subprime mortgage industry has been hard on predatory brokers, too. They feasted for years on bad loans until reality crashed down and the money ran out, and there they were: sharks without a frenzy.

  • Now they are circling again. Predators of every sort have regrouped and returned to their old ways, this time as loan-modification companies, inserting themselves between hard-strapped homeowners and banks, offering to work deals — for cash up front.

***

  • Troubled homeowners know all about the relentlessness of the loan-rescue racket: it fills their mailboxes and sends salespeople to lurk on their doorsteps. Foreclosure filings are public records, and loan modifiers routinely swarm courthouses to find leads.

  • Loan counselors at the Long Island Housing Partnership, a respected nonprofit in Hauppauge, N.Y., tell of scammers crashing its housing workshops, posing as troubled borrowers, then working the crowd with sales pitches.(1)

For more, see Return of the Predators.

(1) Some state attorneys general have already started going after these loan modification firms. For example, there are ongoing efforts by the state AGs in Illinois, Tennessee, Colorado, and Florida. Further, state AGs in Tennessee and Florida have reportedly also included allegations of unauthorized practice of law in their actions against loan modification firms.

Equitable Mortgage Defense Invoked In Lease-Purchase Agreement; Judge Denies Tenant Eviction, Says Foreclosure Is Required To Boot Renter

In Sarasota, Florida, local real estate attorney Jefferson F. Riddell writes in the Bradenton Herald on the fear (for a landlord) that a court will not allow a property owner to evict a tenant under a lease-purchase arrangement:
  • [T]he fear was realized recently when the seller under a lease purchase type document went to county court in Sarasota to evict the tenant for failure to make monthly payments. The judge scrutinized the document, concluded that it was an agreement for deed and required the seller to foreclose it in circuit court like a mortgage.

  • Cost to the seller for the foreclosure was about $2,000 instead of the nominal cost of a tenant eviction, and the buyer was able to stay in the property rent free for months while the foreclosure was being completed.

Source: Watch out for lease purchase agreements.

Phoenix Man Found Guilty For Filing Fraudulent Lien Releases On Home, Then Pocketing $850K In Subsequent Refinance

From the Office of the Arizona Attorney General:
  • Attorney General Terry Goddard [last week] announced that Delanie Belfield Ross, 39, of Phoenix, has been found guilty by a Maricopa County Superior Court jury on three counts of felony fraudulent schemes and practices and one count of theft.

  • According to court documents, Ross, along with his wife, Veronica Cooper Ross, and his brother-in-law, Willard Cooper, fraudulently obtained mortgage loans for the purchase of a $3.2 million Paradise Valley home in 1994.

  • After taking possession of the house, Delanie Ross recorded fraudulent releases of the liens on the loans with the Maricopa County Recorder. He then represented the house as being owned free and clear to potential investors and obtained an $850,000 line of credit from a private family of investors, using the house as collateral.

For the Arizona AG's press release, see Phoenix Man Found Guilty of Felony Fraud and Theft.

For the original indictment in this matter, see State of Arizona v. Ross.

The Best Defense Is A Good Offense, Says Homeowner's Foreclosure Attorney

In Orlando, Florida, Central Florida News Channel 13 reports:
  • Matt Englett, the lawyer of a Longwood man who lost his job and is in foreclosure, is working to modify his client's loan and do whatever it takes to make sure his client has a place to live. "I can take a 90-day uncontested foreclosure, and I can drag it out for two or three years if we have to," Englett said.

***

  • Englett warned just because lenders contact you and make you think they are working with you to modify your loan, look into taking action anyway. If not, the lender may go ahead and take your home before you know it.

For more, see Take Action Against Your Lender During Foreclosure. missing mortgage foreclosure docs gamma

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.