Hedge Fund Sues Countrywide Over $8.4B Bank Of America Loan Modification Settlement Of Predatory Lending Charges With State AGs

In New York City, Bloomberg News reports:

• Countrywide Financial Corp., the home lender acquired by Bank of America Corp., was sued by Greenwich Financial Services Fund over claims an agreement to reduce payments on mortgages by $8.4 billion would hurt investors.

• The hedge fund claims investors will be harmed by Bank of America’s settlement, reached on behalf of Countrywide, with 15 state attorneys general. The value of trusts that bought 400,000 mortgages will decline under the deal, the fund said.

• In the proposed class action, or group lawsuit, the Greenwich, Connecticut-based fund demands a declaration that “Countrywide must purchase at par every mortgage loan that it sold to any of the 374 securitization trusts,” David Grais, a lawyer for the fund said today in an e-mailed statement. Grais said Countrywide could owe the trusts $80 billion.

For more, see Countrywide Sued by Fund Over $8.4 Billion Loan Deal.

See also:

1) The Wall Street Journal: Mortgage-Bond Holders Get Voice (Greenwich Financial's William Frey Challenges Loan Servicers Like BofA) (subscription may be required; if no subscription, try here, then click link for story):

• [T]he new lawsuit, filed in New York state court, doesn't take issue with the actual settlement but focuses instead on who should bear the costs. Noting that the attorneys general accused Countrywide of "widespread predatory lending," the lawsuit alleges that Countrywide plans "to pass most or all" of the cost of the settlement to investors.

2) The American Lawyer (at Law.com): Class Action Demands Countrywide Repay Hedge Funds for Losses.

3) Summons & Complaint: Greenwich Financial Services Distressed Mortgage Fund 3, LLC v. Countrywide Financial Corporation. MortgageServicingIssuesAlpha

Alleged Hampton Roads Equity Stripping Scam Operation Leaves Homeowners Out On The Street, Straw Buyers Holding The Bag

In Hampton Roads, Virginia, The Virginian Pilot reports:

• [T]he alleged scammers presented themselves as saviors of financially distressed - often first-time - homeowners, promising to repair their credit and save their homes. Instead, they recruited straw buyers to purchase the properties - in the process taking out bigger mortgages - and walked away with the proceeds. That left two classes of victims in the dust: dispossessed homeowners and empty-handed straw buyers stuck with inflated mortgages.

***

• The figure at the center of the operation [...] is Shanita Lacy, owner of a Virginia Beach-based company called Clean Slate Financial Services. Settlement documents indicate that she pulled out more than $750,000 in equity from the nine properties identified so far.

For more, see Deals with Beach company put some owners out of homes.

For story update (12-5-08), see More report losing homes to 'credit repair' deals.

Investigative Report Reveals Blight-Inducing Tampa House Flipping Operation; 35 Homes Ended Up In Foreclosure (And Counting)

In Tampa, Florida, an investigative report by the St. Petersburg Times describes an apparent blight-causing, straw buyer, house flipping operation involving what it refers to as "a constellation of 90 homes stretching across Tampa, all bought and sold in the past four years by a 34-year-old tattoo parlor owner."

• Most of the homes Sang-Min Kim [aka Sonny Kim] sold are empty now. Many have code violations, and are clustered in impoverished neighborhoods such as Belmont Heights and Sulphur Springs.

• The trail of foreclosures and blight is lined with the bad mortgages approved or assigned by Wachovia, Washington Mutual, Bank of America, National City Bank, Lehman Brothers, Fannie Mae, Freddie Mac and Wells Fargo.

***

• Dissect any of the 35 sales involving homes that ended up in foreclosure after they were sold by Sonny Kim, and it's hard to believe that lenders made any attempt to verify anything.

Reportedly, Sonny Kim politely declined any comment for this story.

For more, see A case study in housing collapse.

Washington State Victim Of Alleged Sale Leaseback Foreclosure Rescue Scam Goes To Court To Save Home Of 35 Years

In Bellevue, Washington, KING-TV Channel 5 reports:

• Karen Handlin has been narrowly saved from eviction – for now. She’s filed a first-of-its-kind lawsuit in Western Washington to save the house her family has owned for 35 years. Handlin almost lost it to foreclosure and then, she says, to a company called Alternative Investors, which claimed it could rescue her from foreclosure.

For more, see Investigators: Alleged foreclosure rescue scam goes to court (read text) (watch KING5 video).

360 Unit Owners Dragged In As Defendants In Mechanics Lien Lawsuit Between Contractor, Condo Developer

In Northern Virginia, Washington Business Journal reports:

• As the sun set over Potomac Yard on Nov. 7, owners at The Eclipse condominium community came home to an unpleasant surprise. Nearly three-quarters of the units had a two-inch-thick stack of legal papers on their doorsteps, notifying the owners that every one of them was being pulled into a lawsuit between their developer and the construction company that built the 465-unit project just south of Reagan National Airport.

• The owners’ predicament is just one more wave in the economic undertow that has swept up banks, developers, builders and homeowners alike. For the owners — some of whom took a risk in buying a unit in a troubled building in the first place — the lawsuit was yet another setback.

For more, see Condo owners caught in crossfire of builder dispute. StiffingContractorsTheta

Ratings Agencies Face Charges Of Civil Rights Violations In Complaint Filed With HUD; Actions Allegedly Facilitated Discriminatory Subprime Lending

Syndicated real estate columnist Kenneth Harney recently reported:

• In what is apparently the first legal action of its kind, an association of community-based organizations has filed a federal civil rights complaint against two of the three largest Wall Street ratings agencies,(1) charging that their inflated ratings on subprime mortgage bonds disproportionately caused financial harm to African-American and Latino home buyers across the country.

• The complaint,(2) filed by the National Community Reinvestment Coalition, alleges that Moody's Investor Services and Fitch Ratings Ltd. enriched themselves by assigning high ratings to bonds backed by mortgages "that were designed to fail" because of "unfair payment terms and insufficient borrower income levels."

For more, see Civil rights complaint filed against rating agencies.

See also, NCRC press release: NCRC Files Civil Rights Complaint Against Fitch and Moody’s (Civil penalties and equitable relief sought for consumers and communities injured by rating agencies’ role in foreclosure crisis).

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

(1) According to the column, a third rating agency with heavy involvement in the subprime boom, Standard & Poor's Corp., was not named in the complaint, but has been "in discussions" with the coalition, according to David Berenbaum, the group's executive vice president. If the discussions with S&P prove "unsatisfactory," he said, the company could be the subject of a separate action, the column states.

(2) The coalition reportedly filed its complaint with the Department of Housing and Urban Development's fair housing and equal opportunity unit. After a review, the department could either dismiss the allegations or refer the case to the Justice Department of the incoming Obama administration for litigation next year. If HUD fails to respond adequately, the coalition says it may file a federal civil lawsuit. DiscriminationPredatoryLendingAlpha

The Call For Home Mortgage Modification Rights In Bankruptcy Proceedings Continues

The Honorable J. Rich Leonard, a jurist who currently toils in the U.S. Bankruptcy Court for the Eastern District of North Carolina, recently wrote in The Washington Post advocating for a change in the cuurrent bankruptcy law to allow for the modification of troubled home mortgages in bankruptcy proceedings. In his article, Judge Leonard reminds us of the following:

• [H]omeowners are the only ones who cannot modify the terms of their secured debts in bankruptcy. Corporate America flocks to bankruptcy courts to do precisely this -- to restructure and reamortize loans whose conditions they find onerous or can no longer meet. Airlines are still flying and auto parts makers still operating because they have used this powerful tool of the bankruptcy process. Lehman Brothers will surely invoke it.

• But when the bankruptcy code was adopted in 1979, the mortgage industry persuaded Congress that its market was so tightly regulated and conservatively run that it should be exempted from the general bankruptcy rules permitting modification.

For more, see Give bankruptcy judges the power to alter mortgages.

For a similar position espoused by the Honorable Keith M. Lundin, a judge in the U.S. Bankruptcy Court in the Middle District of Tennessee, see:

• The Tennessean: Homeowner help may lie in bankruptcy courts (Chapter 13 modification could fend off foreclosures).

Plaintiffs In WaMu Suits May Be Left Holding The Bag; "Almost Nothing" Says FDIC Rep Referring To Assets Left In Receivership For Aggrieved Homeowners

In Seattle, Washington, a recent column in Seattle Weekly describes the problems homeowners suing Washington Mutual for violations of lending and consumer laws may face now that WaMu has been seized and put into receivership by the FDIC.

• [T]he search for redress is made even tougher by the amount of money left in the receivership—"almost nothing," according to Andrew Gray, [an] FDIC spokesperson.

• Some lawyers [...] are pushing on regardless, waiting to see what happens. Others are dropping their claims. "We're probably not going to go ahead in light of how treacherous and difficult that's going to be," says [a local attorney who filed a class-action suit against WaMu over what he claims were hidden and excessive fees].

For more, see Wronged by WaMu (After the crash, there’s little recourse).

Loan Modification Firms Drawing Attention From NY Feds, State AG

In New York City, Crain's New York Business reports:

• [W]ith citywide foreclosures up 50% over a year ago, some of the same bankers and brokers who sold unaffordable, subprime loans are now joining the rapidly growing ranks of mortgage modification consultants.

• While some members of what an online ad called one of the “fastest-growing job markets in the country” run legitimate businesses, housing advocates say many are taking people's money and doing little or nothing in return. The burgeoning industry has caught the attention of the FBI's New York office and the state attorney general.(1)

***

• Frequently, they ask homeowners for thousands of dollars up front, which is illegal in 12 states, including New York, unless the fee is made to a lawyer or nonprofit. As part of the sales pitch, homeowners are often advised to stop making mortgage payments,(2) putting their homes in further jeopardy of foreclosure.

For more, see Mortgage holders are marks (Loan modification specialists take money, do little in return).

(1) Other law enforcement agencies are zeroing in. The Illinois attorney general last month filed seven lawsuits against modification firms that failed to negotiate workouts for clients. The Colorado attorney general has filed 15 cease-and-desist orders against such companies. State AGs in Tennessee and Florida have also targeted loan modification firms in lawsuits alleging, among other things, that their activities constitute 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.

(2) For whatever its worth, advising homeowners to violate the terms of their loan (by advising them to stiff their mortgage lenders) may give rise to a claim of tortious interference with a contract (or a tortious interference with a business relationship) by the mortgage lender and/or mortgage servicer being stiffed, and subjecting the loan modification firm to potential liability for dispensing the "sage" advice. See generally, White Plains Coat & Apron Co., Inc. v. Cintas Corp., 2007 NY Slip Op 3591; 8 N.Y.3d 422; 867 N.E.2d 381; 835 N.Y.S.2d 530; 2007 N.Y. LEXIS 847 (2007):

• It is a familiar proposition that one "who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other for the pecuniary loss resulting to the other from the failure of the third person to perform the contract." Restatement (Second) of Torts § 766.

Court Denies Dismissal Of Suit Accusing County Of Screw Up In Giving Proper Notice To Owner In Tax Foreclosure Action

In Hopewell, New York, the Daily Messenger reports:

• A state Supreme Court justice has denied Ontario County’s attempt to dismiss a lawsuit that claims the county and its treasurer mishandled the foreclosure of the Akropolis Family Restaurant.

***

• The lawsuit alleged the county and county Treasurer Gary Baxter failed to follow correct procedures in the foreclosure auction of the Akropolis Family Restaurant in May 2007. The civil suit claimed Baxter and the county violated the civil rights of Hetelekides by mishandling the process regarding notification and other issues.

For more, see Judge rules for Akropolis owner.

For other stories on the Acropolis foreclosure, see:

• Rochester Democrat and Chronicle: Akropolis restaurant suit still simmering in Ontario County,
• Daily Messenger: Lawsuit filed against Ontario County in tax-foreclosure case,
• Daily Messenger: Flexibility, empathy lacking in tax cases.

Go here and go here for other posts on foreclosures involving faulty notifications to property owners. foreclosure faulty notice

Foreclosure Rescuers, Loan Modifiers Circle San Joaquin Valley Homeowners In Financial Trouble

In the San Joaquin Valley region of California, the Merced Sun Star reports:

• The foreclosure sharks are circling the San Joaquin Valley. [...] With Stockton, Modesto, Merced and Fresno all ranking among the nation's leading cities for foreclosures, the market invites commercial exploitation. Hundreds if not thousands of San Joaquin Valley homeowners are being besieged by letters, phone calls and even door-to-door visits that purportedly offer escape from financial harm.

• Barbara Galvan, for instance, resides in southeast Fresno and said she has never missed a mortgage payment. Nonetheless, as her adjustable rate keeps rising, she's been getting the hard sell from purported rescuers. "I'm getting lots of calls," Galvan said. "They want me to pay $3,000 or $4,000 up front. I tell them, where will I get $3,000 if I can't pay my mortgage? They say, I could put it on my credit card."

For more, see Housing crisis: Foreclosure scams abound in Valley (Organizations promise help but homeowners need to read fine print).

See also, Beware of 'vultures' as foreclosures grow:

• [San Joaquin] Valley officials report that homeowners are getting pounded by letters, phone calls and personal visits from individuals and businesses claiming they have an easy answer to financial problems. For fees of $3,000 or $4,000, they'll unlock the key to saving your home. loan modification

Pittsburgh Homeowner Out $2,800 Paid To Upfront Fee Foreclosure Rescue Firm In Exchange For Failed Loan Modification Promise

In Pittsburgh, Pennsylvania, KDKA-TV Channel 2 reports:

• [S]tephanie and her husband have been unable to keep current on their mortgage payment which carries a 12 percent interest rate. Three months ago, they gave a Florida foreclosure help company $2,800 in hopes the company could convince their lender to modify their loan.

***

• Stephanie says the company assured her of a 90 percent chance of a modified loan, but three months later her lender told them that wasn't in the cards. Now the company won't return her calls and has reneged on their money-back guarantee. "I can't even get a call back, much less money back," Stephanie said.

For more, see Couple Facing Foreclosure Fleeced By Company (read story) (watch KDKA video).

Developer Takes A Hike, Leaving Behind Handful Of Homeowners Living In Ghost Town

In Lancaster, California, the Contra Costa Times reports:

• The families who moved into Westview Estates were expecting to live in a lovely gated neighborhood of new homes, built on former farmland in this desert city. But shortly after the first families - some paying up to $400,000 for a new home - moved in around spring 2007, they started noticing problems with the water systems.(1)

***

• Residents say problems with the water - not just the economy - have turned what was planned as a 425-home development into a ghost town where homes sit vacant amid graded dirt lots choked with weeds. Only 23 homes were sold before the developer walked away, according to residents. Angry and feeling betrayed, the few residents left feel imprisoned in their problem-plagued homes that they cannot sell.

For more, see Antelope Valley homeowners left hanging by developer.

(1) Reportedly, water stopped flowing in midshower, washing machines halted midcycle, or no water came out at all. Residents could not shower and water lawns at the same time, and fire alarms went off in the middle of the night.

Traveling Real Estate Investment Seminar Teaches Sale Leaseback, Foreclosure Rescue Deals: Media Report

In Bellevue, Washington, KOMO-TV Channel 4 reports:

• A newspaper ad for the Robert Allen Institute's free seminar promised to teach participants how to become millionaires. "Banks are desperate to unload foreclosed properties," the ad's copy read. So KOMO News attended the free seminar in Bellevue, undercover camera in tow.

Reportedly, participants were told they could learn how to knock on a homeowners' door and convince them to surrender the title, then offer to broker a deal to allow the homeowner to rent back their home with an option to buy back the house.

For the video report, see The truth behind 'the best investment ever'.

Go here to read the text of the story.

Landlord Faces Discrimination Complaint For Allegedly Forcing White Tenant's Move After Being Seen Talking With Black Neighbors In Front Yard

The U.S. Department of Housing and Urban Development announced last month:

• The U.S. Department of Housing and Urban Development (HUD) [last month] announced that it has charged two Tallassee, Alabama landlords with violating the Fair Housing Act for allegedly forcing white tenants to move out of their house after the owners saw the couple talking with black neighbors in their front yard.(1)

For the rest of the press release, see HUD Charges Alabama Landlords With Discrimination (Couple forced to move after visit from black neighbors).

(1) According to the press release, in February 2008, Melissa Jones, her fiancé, and their child moved into a property owned by Wilber and Julie Williams. While Jones' African-American neighbors were visiting with her in the front yard, the Williamses drove by and witnessed the gathering. Later that day, Ms. Williams called Ms. Jones and allegedly said, "Those people need to leave. I don't want those people on my property." According to the HUD charge, Ms. Williams intimidated and coerced Ms. Jones during another phone call.

Partnership Deal Results In 78 Year Old Connecticut Man's Eviction From Home, Losing Farm & 50% Interest In Property; Now Living Out Of Car

In Greenwich, Connecticut, the Greenwich Citizen reports:

• After 43 years of operating Purdy's Farm on King Street, Delmo Zanette effectively became a farmer without a farm at midnight Oct. 31. Not by choice -- at least by his account.

• The 78-year-old Zanette was ordered to vacate the property by court order resulting from a legal battle that began four years ago and ended on Oct. 7 when the court finally ruled against him and in favor of Ronald Pecunies and Arthur K. Watson Jr. - his business partners and now adversaries in the case.

***

• "I was 100 percent owner of the farm and somehow they got hold of 50 percent of my real estate," said Zanette in a phone interview this past week with the Greenwich Citizen. "I was too trusting, I did not have a lawyer I trusted them implicitly ... but somewhere things didn't go right."

***

• Zanette says with the closing of the farm, he is now surviving on income from his monthly Social Security check of $574 and hopes to raise additional money by having tag sales of antiques and a collection of some farm artifacts and books he owns. Despite having some family in the area, Zanette says he is living out of his Suburban and periodically on the couches of family and friends. [...] Currently, Zanette is still 50 percent owner in the properties, which are now on the market with Weichert Realty, listed for $2.6 million.

For more, see A Farmer Without a Farm: What to Do?

Overseas Soldier Facing Foreclosure Over Payment Snafu Looks To TV Troubleshooter To Shine Light On Lender, Straighten Out Mess

In Raleigh, North Carolina, WTVD-TV Channel 11 reports:

• [M]ajor Dianna Echard worked so hard for all these years in the military here and in faraway war zones. But when she got home to Raleigh, she couldn't get inside her home. The locks had been changed. Major Echard tells Troubleshooter Diane Wilson, "I've tried to pay. It's like I'm giving money away and no one is willing to take it." Even though she says she's always had the money to pay her mortgage.

For more, see A local soldier fights foreclosure issues.

Foreclosing Lender Seeks "Rent To Own" Permit From City Council To Unload Unsold New Condo Units

In Marlborough, Massachusetts, Community Advocate reports:

• The current owner of the Trinity Court Development on West Main Street, Henry Bar, appealed to the City Council Nov. 24 for a special permit to modify restrictions placed upon the condo development. Citing hardship from the current economic climate, Bar, who has yet to sell one of the condos, is requesting a special permit to allow a temporary modification to the condition stipulating owner occupancy.

***

• After lowering the price twice, he said that the current sale price, which is around $299,000, is already down 25 percent from the original asking price. In an effort to get people living there, Bar would like to offer potential homeowners the option of renting to own or simply renting.

For more, see Condo developer asks for rent-to-own option.

Prince George's State's Attorney Nearing Indictment On 20 Mortgage, Foreclosure Fraud Cases; Lawyers, Loan Officers, Others In The Cross Hairs

In Upper Marlboro, Maryland, The Maryland Daily Record reports:

• The Prince George’s County State’s Attorney’s Office hopes to send a message to potential perpetrators of mortgage fraud: “Not in this county.” Operating since September, the office’s new Mortgage and Foreclosure Division is hoping to bring 20 cases to indictment soon, said Assistant State’s Attorney April Richardson.

• Richardson said the division is moving forward against loan officers, title companies, lawyers and brokerages thought to have participated in mortgage scams.

For more, see Mortgage fraud unit targets lawyers, loan officers.

Commercial Morgage Meltdown On The Horizon?

The Associated Press reports:

• The full scope of the housing meltdown isn't clear, and already there are ominous signs of a new crisis — one that could turn out the lights on malls, hotels and storefronts nationwide.

• Even as the holiday shopping season begins in full swing, the same events poisoning the housing market are now at work on commercial properties, and the bad news is trickling in. Malls from Michigan to Georgia are entering foreclosure.

For more, see Commercial mortgages could melt down next.

Florida Pastor, Wife Charged With Swindling Elderly Couple Out Of $100K+ In Alleged Real Estate Sale, Refinance Scam

From the Florida Department of Financial Services:

• Florida Chief Financial Officer Alex Sink announced [Wednesday] that additional charges have been filed against a Jensen Beach pastor and his wife in an ongoing investigation by the Department of Financial Services, Division of Insurance Fraud (DFS), into allegations the couple bilked investors throughout central and south Florida out of more than $8 million in fraudulent real estate schemes.(1)

• In the newest charges, Rodney and Shalonda McGill are accused of duping an elderly couple out of more than $100,000 worth of property and cash.

For the rest of the press release, see CFO Sink's Call For Additional Information Results In New Charges For Jensen Beach Pastor, $500,000 Additional Bond.

(1) According to the press release, the McGills already face charges of Racketeering, first degree; Conspiracy to Commit Racketeering, first degree; Grand Theft, first degree; Grand Theft, third degree; and Obtaining a Mortgage by False Representation, third degree, for saddling investors with more than $1.15 million in mortgage loans by “flipping” properties in Martin and St. Lucie counties that the McGills sold using fraudulent loan applications. The additional charges announced Wednesday, two counts of grand theft in the first degree, mean the McGills face up to 30 years each in prison as well as penalty enhancements provided by Florida law for theft from persons over the age of 65, the press release states.

More Failed "Contract For Deed" Deals, More Homebuyers, 3rd Party Investors Left Holding The Bag

In Centerton, Arkansas, The Morning News reports:

• James and Patricia Leach of Bentonville couldn't believe their luck in September 2006 when they were approved to buy a home. [...] But two years, two months, and $51,000 later, they are packing their belongings and moving across town to a home they are renting.

• The Leaches are one of at least two dozen local families who 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. Greenleaf, through its contractor Bentonville-based Real Estate Co., was a third party that arranged for real estate investors across the nation to purchase homes, which were then resold to local families through a contract for deed.

For more, see Home Deal Fails For Centerton Families.

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

Loan Officer Convicted For Role In Mortgage Scam Defrauding 200+ People, 20 Banks; Described As "Architect" Of Scheme

In Columbus, Ohio, The Columbus Dispatch reports:

• A loan officer was convicted yesterday for his role in a scheme that defrauded more than 200 people and 20 banks, but an appraiser who worked with him was acquitted of all charges in the case. After about eight hours of deliberations, a federal jury convicted Jonathan L. Boyd for a mortgage-fraud scam that was fueled by greed and aided by a hot real-estate market, prosecutors said.

• Early in the afternoon, the jury returned with not-guilty verdicts for co-defendant James D. Gaither, who was accused of inflating appraisals to match the prices of properties for which Boyd found buyers.

***

• Prosecutors said Boyd, 39, [...] and Gaither, 38, [...] targeted "inexperienced buyers" in 2003 and 2004, when homes were selling quickly. Many of the homes approved for loans or appraised by the men ended up in foreclosure, agents for the Internal Revenue Service said. [...] Prosecutors had said Boyd was the architect of the scheme.

For more, see Mortgage officer guilty of fraud.

For a copy of the original indictment, see U.S. vs. Green, Schottenstein, et al.

Go here for earlier reports on this scam.

Bring Philadelphia Foreclosure Diversion Program To Chicago, Say City, Cook County Officials

In Chicago, Illinois, Chicago Defender reports:

• A new foreclosure program in Philadelphia has been so successful there that Cook County Clerk of the Circuit Court Dorothy Brown said the county should duplicate to slow the rash of foreclosures here.

• Brown and other elected officials joined Action Now, a Chicago housing non-profit organization, at a Tuesday news conference to propose a local version of the Philadelphia Residential Mortgage Foreclosure Diversion Pilot Program , a foreclosure diversion program that has proven successful in East Coast city.

For more, see City, county leaders look to bring Philly foreclosure program to Chicago area homeowners.

See also, WBBM-780 AM: Cook County Judges Urged To Decrease Foreclosures (Cook County judges are being called upon to implement a plan that's designed to decrease foreclosures. The plan is modeled after a program in Philadelphia).

Go here for a copy of the foreclosure diversion program, Joint General Court Regulation No. 2008-01, Court of Common Pleas of Philadelphia County.

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:

• San Jose Mercury News: Squatters in abandoned homes raise fears among East County Realtors,
• KGO-TV Channel 7: Vandals target foreclosed homes.

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

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:

• Chi-Town Daily News: In wake of bribery scandal, tenants question landlord's dealings (Residents of a building linked to a federal bribery probe earlier this year say their apartments were transformed into condominiums and sold without their knowledge, and their suspicions have prompted a state agency to investigate),
• Illinois Department of Financial and Professional Regulation press release,
• State of Illinois orders & complaints filed against Envision Lending Group, Gateway Mortgage Group, Arthur Pascu, Pawel Janowicz, Peter Petrovich, LMB Properties, LLC.

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.

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• 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