Frank Seeks At Least $50B In TARP Funds To Help Homeowners Facing Foreclosure

The Associated Press reports:

• [R]ep. Barney Frank, who heads the House Financial Services Committee, issued an outline of his proposal to attach strings to spending of the money by either the Bush administration or the incoming Obama government.

• The new conditions would include substantial efforts to reduce mortgage foreclosures,(1) limits on compensation for executives at companies receiving federal money and a better method for the government to track whether banks are using it to boost lending.

For more, see Key lawmaker sees action on bailout bill.

For Chairman Frank's outline, see Frank Releases Outline of Legislation to Amend TARP.

Thanks to Mike Dillon at GetDShirtz.com for the heads-up on the story.

(1) Reportedly, Chairman Frank seeks a mandate that at least $50 billion go to help struggling borrowers avoid foreclosure out of the second $350 billion in federal bailout funds.

Bank Screw-Up Throws Tennessee Congresswoman's Home Into Foreclosure; No Word Yet On Impending Blizzard Of Unscrupulous Loan Modification Offers

In Brentwood, Tennessee, The Associated Press reports:

• A bank's mistake caused a Tennessee congresswoman's home to enter foreclosure. Bank officials say Republican U.S. Rep. Marsha Blackburn's home was placed into foreclosure proceedings because of a processing error.

• GreenBank spokesman Bill Adams said in a letter dated Thursday that Blackburn's husband had authorized several electronic mortgage payments for the suburban Nashville home, but that the bank failed to send the money to Countrywide Financial. Adams says the Greeneville-based bank is working with Countrywide to resolve the issue.

No word on whether Rep. Blackburn has begun finding her mailbox stuffed with loan modification solicitations.

Source: Bank: error led to Blackburn's home foreclosure.

IRS Strikes Again - Leaves Lawyer Befuddled Over "Nickel & Dime" Demand For Payment, Notice Of Refund

In Detroit, Michigan, National Public Radio reports:

• James Howarth of Detroit has a new pen pal — the Internal Revenue Service. First came a letter in November. The IRS said Howarth owed a nickel and should pay up or face additional penalties or interest.

• Then came the second letter. Howarth told the Detroit Free Press that letter said the IRS owed him four cents. That letter said Howarth won't get the money back automatically since it's less than a dollar. Howarth called an IRS toll free number to sort it out. But after waiting on hold for a long time, he gave up.

Source: IRS Sends Confusing Letters To Detroit Man.

For the Detroit Free Press story, see 9-cent IRS dilemma leaves lawyer confused (He owes a nickel and is due 4-cent refund).

Motorcycle Group Expects 3-Week Effort To Rescue 200 Cats In Long Island Home Facing Foreclosure

In Moriches, New York, ZooToo Pet News reports:

• The tough riders with tender hearts at Rescue Ink have struck again, this time stepping in to relieve a Long Island family caring for 200 cats. The nonprofit organization, comprised mainly of tattooed motorcyclists who bonded over their love for animals, pulled 30 cats from a Morchies, N.Y., home on Wednesday.

• They will return today to remove another 75 cats from the ranch house, which was stuffed with animals in "every single crevice," according to Rescue Ink volunteer Robert Misseri.

***

• The removal efforts will continue for the next three weeks, providing the organization with much-needed time to find veterinarians willing to work pro bono, as well as foster homes.

For more, see Tough Guys Need More Muscle to Rescue 200 Cats.

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

Fannie Begins Testing "Pre-Approved Short Sale Program" For Underwater Homes In Phoenix, Orlando

The Wall Street Journal reports:

• Fannie Mae is testing a new program to stave off foreclosures by preapproving "short sales" of homes, in which mortgage companies allow homeowners to sell houses for less than the value of existing loans, forgiving the difference.

***

• Two pilot projects, in Phoenix and Orlando, Fla., began at the end of December and will last for three months. The test run is limited to properties secured by a Fannie Mae mortgage and serviced by Countrywide Financial Corp., a subsidiary of Bank of America Corp. Only homes already listed at less than the unpaid balance on the mortgage are eligible for the pilot. So far, about 400 homes have qualified for preapproval between the two markets.

For more, see Fannie Mae Tests 'Short Sales' as Alternative to Foreclosures (subscription may be required; for those without a subscription, try here, then click link for the story).

Major Lender, Top Senate Democrats Reach Understanding On Mortgage Cramdown Provisions Allowing Bankruptcy Judges To Modify Troubled Home Loans

The Wall Street Journal reports:

• A Senate bill aimed at giving strapped homeowners more leverage in renegotiating their mortgages cleared a hurdle Thursday when Citigroup Inc. dropped its opposition. The legislation, which is being advanced by top Senate Democrats, would let judges set new repayment terms for mortgage holders in bankruptcy court.

***

• The proposal from Sen. Dick Durbin, an Illinois Democrat, to allow so-called mortgage "cramdowns," would apply only to homeowners who have filed for Chapter 13 bankruptcy protection.

***

• The Democrats' proposal allows judges to approve plans that make major reductions in home-loan debts, after homeowners certify that they have attempted to contact their lenders about a mortgage reduction before bankruptcy proceedings begin. [...] The cramdown bill would apply to all mortgage loans, including subprime loans, written any time prior to the bill's date of enactment.

• In a concession to lenders, a mortgage debt could be forgiven entirely only if the lender was found committed a major violation of the Truth in Lending Act. Under the bill's original language, the entire mortgage debt could be wiped away based on a violation of any number of state and federal consumer lending laws.

For more, see Plan to Cut Foreclosure Rate Clears Key Hurdle.

See also:

• BusinessWeek: Does Citigroup Stand Alone? Industry Balks at Bankruptcy Bill,
• New York Times: Citi Reaches Deal With Lawmakers on Home Loans.

FDIC Unloads $558M In Bad Loans For Less Than 50 Cents On Dollar To Firm Led By Ex-Countrywide Head; Price To Be Paid Out Over Time

Bloomberg News reports:

• Stanford Kurland, the former Countrywide Financial Corp. president, says his new company’s purchase of $558 million in home loans issued by a failed Nevada bank will be a springboard for further growth. Private National Mortgage Acceptance Company LLC ["PennyMac"], based in Calabasas, California, is paying less than 50 cents on the dollar for loans that the Federal Deposit Insurance Corp. acquired last July after First National Bank of Nevada collapsed.

***

• Kurland declined to discuss financial details of the transaction, which FDIC spokesman David Barr said doesn’t involve any sharing of possible losses. The FDIC will be paid 80 percent of loan cash flow until an undisclosed level of payments are received, then 60 percent thereafter, Barr said.

For more, see PennyMac, Led by Ex-Countrywide Head, Sees Promise in Bad Loans.

FTC, 3 Loan Orignators Settle Charges Of TILA & Reg Z Violations; Deceptively Advertising "Teaser" Rates

The Federal Trade Commission announced:

• Three mortgage loan advertisers that allegedly deceptively touted low monthly payments and low rates without fully disclosing loan terms have agreed to settle Federal Trade Commission charges that their ads violated federal law.(1)

• According to the FTC, the ads represented that people could receive mortgage loans at the terms prominently stated in the ads. However, in violation of the FTC Act, the ads allegedly failed to disclose, or failed to disclose adequately, that the advertised low monthly payment amounts and low rates apply only for a limited time, after which they will increase, and that the advertised payment amounts and rates did not include the interest owed each month, with the interest added to the total loan balance.

For more, see Three Home Loan Advertisers Settle FTC Charges; Failed to Disclose Key Loan Terms in Ads.

(1) For links to the relevant court documents in the three cases (ie. consent orders, original FTC complaints, etc.), see:

• American Nationwide Mortgage Co.;
• Michael Gendrolis, doing business as Good Life Funding; and
• Shiva Venture Group, Inc., doing business as Innova Financial Group.

IRS Taxpayer Watchdog Urges Congress To Ease Laws Governing Mortgage, Consumer Debt Defaults & Cancellations

The New York Times reports:

• Congress should ease certain tax laws governing defaults on mortgages, credit cards and other consumer debt to help Americans who are struggling in the economic downturn, the watchdog agency of the Internal Revenue Service said Wednesday. In its annual written report, the agency, the National Taxpayer Advocate, said that without the changes hundreds of thousands of Americans could mistakenly pay taxes this year on their canceled debts, adding to their financial malaise.

• The I.R.S. generally treats canceled debts as subject to federal income tax unless the taxpayer is insolvent or in bankruptcy proceedings. But Nina E. Olson, who leads the watchdog agency, wrote that most taxpayers eligible to exclude canceled debts from their overall taxable income were unaware that they must file an obscure, complex form(1) with the I.R.S.

***

• Congress has already provided some debt relief to homeowners through the Mortgage Forgiveness Debt Relief Act of 2007, which exempts from taxes any debts reduced or canceled during foreclosure or mortgage restructuring. But the exemption applies only if proceeds are used to acquire or improve a principal residence — something home buyers do not always do.(2)

For more, see Gentler Tax Laws Urged on Debt Default.

See also IRS Publication 4681: Canceled Debts, Foreclosures, Reposessions and Abandonments.

Go here for more on Dodging The Income Tax On Real Estate Foreclosure & Short Sales.

(1) See IRS Form 982, "Reduction of Tax Attributes Due to Discharge of Indebtedness."

(2) Ms. Olson said that it appears that most subprime borrowers use a portion of their loans for other purposes (e.g., to pay off car loans, credit card balances, student loans or medical bills), the story reports.

Nebraska Senior Care Residents Among Those Affected By Financial Problems Of Oregon-Based Assisted Living Center Operator

In Seward, Nebraska, the Seward County Independent reports:

• Heartland Park Senior Living Community is among four senior assisted living centers in Nebraska fighting off foreclosure by filing Chapter 11 bankruptcy. Seward Senior Living LLC which goes by the Heartland Park name is owned by Sunwest Management Inc. [...] The other three in Nebraska include: Willow Ridge Senior Living Community in McCook; The Oaks Senior Living Community in Wayne; and Northridge Senior Living Community in Kearney.

***

• Sunwest also filed for bankruptcy on 14 other locations nationwide. Sunwest serves more than 17,000 residents in more than 250 communities in 37 states.

For more, see Senior communities fighting off foreclosure.

Go here for other posts on the financially strapped Sunwest Management and its senior care facilities.

Lender To Foreclose On Leftover South Florida Condo Conversion Units

In Miami, Florida, the South Florida Business Journal reports:

• Coral Gables-based Great Florida Bank has filed its first major foreclosure lawsuit as it seeks to repossess 234 units in three separate projects across south Miami-Dade County.

The three projects in Great Florida Bank’s foreclosure lawsuit are:

• The Cutler Gardens condo conversion – A 35-year-old complex where the condo converter/ developer sold only 10 units. The bank filed to foreclose on the remaining 205,

• The Kendall Lake Towers condo conversion – Only 16 of the 255 units were targeted by the foreclosure,

• The Perrine Industrial Park commercial condo – The developer sold one unit at the 37-year-old property and the bank filed for foreclosure against the remaining 13.

For the story, see Great Fla. Bank foreclosure targets 234 units.

For other recent stories on lenders left holding the bag on unsold and/or unfinished South Florida condos/townhouses, see:

• Lender repossesses 140 units in WPB Whitney: Developer closes on only 70 units in the Whitney in West Palm Beach before agreeing to deed over 140 unsold units to lender;

• Cornerstone Group faces another foreclosure: A fourth South Florida project by Coral Gables-based Cornerstone Group has been slapped with a foreclosure lawsuit, with Wachovia filing to repossess its Villa Capri development in Naranja. The unfinished project was to have 479 townhouses, according to court filings. In addition to Villa Capri, Cornerstone’s unfinished Mediterania Townhouses project in Riviera Beach and 45 unsold units in its Solabella town home project in Miami Gardens and 84 condo units in Hollywood Station also are facing foreclosure.

• Conversions lead the pack of foreclosures: Conversions dominated South Florida foreclosure activity in 2008 among condo and townhomes, with a West Palm Beach project’s $30 million in bad loans leading the way.

FTC, Central Florida Upfront Fee Foreclosure Rescue Operator Resolve Charges Of Screwing Financially Strapped Homeowners

The Federal Trade Commission announced:

• A mortgage foreclosure rescue service that claimed that, for a $1,200 fee, they would stop foreclosure and save consumers’ homes, has agreed to settle Federal Trade Commission charges that it violated federal law. Many consumers who paid the company ultimately lost their homes to foreclosure, and others avoided foreclosure only through their own efforts.

***

• The settlement imposes a judgment of $1,178,920, all but $8,320.84 of which is suspended based on the defendants’ inability to pay. The full judgment will be imposed if they are found to have misrepresented their financial condition. The settlement also contains record-keeping provisions to allow the FTC to monitor compliance with the order.

• The Commission vote to authorize staff to file the stipulated final order regarding Florida-based Mortgage Foreclosure Solutions, Inc., Debra Behrens, and Michael Siani, was 4-0.

For more, see:

• FTC Press Release: Mortgage Foreclosure "Rescue" Operators Settle with FTC,
• Stipulated Final Judgment and Permanent Injunction,
• Original FTC lawsuit: Federal Trade Commission v. Mortgage Foreclosure Solutions, Inc., et al. loan modification

Fannie, Freddie Suspend Foreclosure Sales, Evictions Thru End Of Month

Fannie Mae and Freddie Mac have announced today that they would extend the suspension of foreclosure sales and evictions from single-family properties involving mortgages they own or have securitized through January 31, 2009.
.
A Freddie Mac press release indicates that their announcement also applies to 2-4 unit properties with Freddie Mac-owned mortgages, and their suspension does not apply to vacant single family properties. For the details, see:

• Fannie Mae press release: Fannie Mae Extends Foreclosure Sale and Eviction Suspension,
• Freddie Mac press release: Freddie Mac Extends Suspension of Single Family Foreclosure Sales Evictions Until January 31 2009.

Citigroup, Lawmakers Begin Negotiating Terms Of Acceptable Mortgage "Cram Down" Legislation For Home Loans

The Wall Street Journal reports:

• Citigroup Inc. is leading other lenders in advanced talks with key senators on legislation that would allow judges to set new repayment terms for millions of mortgage holders who wind up in bankruptcy court, people involved in the talks say.(1)

• A person close to Citigroup said that it is still negotiating details of an agreement with lawmakers, and that it hasn't made a final decision to embrace the "cramdown" legislation. But the efforts mark a surprising change of direction by the financial-services industry. Banks have consistently fought such legislation.(2) They say that cramdowns, when bankruptcy judges force lenders to modify mortgages, would raise borrowing costs for all home buyers.

For more, see Citigroup, Senators in Talks to Let Judges Modify Mortgages.

(1) The story states the reversal by lenders reflects new political realities in Washington, and a judgment that banks may lose less in the long run by negotiating a compromise on an issue that resonates with Americans squeezed by job losses and credit problems.

(2) According to the story, the National Association of Home Builders has also made a "U-turn" and reversed its years-long opposition to cramdowns, as foreclosures choke the market for new homes.

NJ Closing Lawyer Cops Plea To Pocketing $4M In Escrow Cash; Blows Money Intended For Existing Lien Holders On AC Slots; Title Insurers Foot The Bill

From the Office of the New Jersey Attorney General:

• Attorney General Anne Milgram and Criminal Justice Director Deborah L. Gramiccioni announced that a Lyndhurst lawyer pleaded guilty [last week] to stealing approximately $4 million entrusted to him for real estate closings, which he used to gamble in Atlantic City.(1)

***

• [Michael P.] Rumore was hired as an attorney and settlement agent for real estate purchasers. Between April 16, 2007 and August 13, 2008, he received approximately $4 million into his attorney trust account from various mortgage companies. He had a duty to disburse the funds for closings and use them to pay balances on existing mortgages and other associated costs and fees.

• In pleading guilty, Rumore admitted that he instead transferred the funds into his personal and business accounts and used them to gamble at casinos in Atlantic City, primarily on slot machines.

For the NJ AG press release, see Lyndhurst Lawyer Pleads Guilty to Stealing $4 Million in Funds for Real Estate Closings Which He Gambled in Atlantic City.

Go here, Go here, Go here, and Go here for other stories of trust account / escrow account theft of funds.

(1) According to the NJ AG press release, the plea agreement provides that the state will recommend that attorney Michael P. Rumore be sentenced to 15 years in state prison, and must sign a consent judgment to pay full restitution to the victims, which are various title insurance companies. Rumore, 50, pleaded guilty to first-degree money laundering and second-degree theft by failure to make required disposition of property received. EscrowRipOffAlpha

Jacksonville Foreclosure Defense Attorney Takes On "Habitat," Hollywood, Ex-Prez' Pet Project Over "Dumpy" Homes

In Jacksonville, Florida, the Times of London reports:

• RESIDENTS of a model housing estate bankrolled by Hollywood celebrities and hand-built by Jimmy Carter, the former US president, are complaining that it is falling apart. Fairway Oaks was built on northern Florida wasteland by 10,000 volunteers, including Carter, in a record 17-day “blitz” organised by the charity Habitat for Humanity. Eight years later it is better known for cockroaches, mildew and mysterious skin rashes.

***

• April Charney, a lawyer representing many of the 85 homeowners in Fairway Oaks, said she had no problems taking on Habitat for Humanity, despite its status as a “darling of liberal social activists”. She said the charity should have told people that part of the estate had been built on a rubbish dump.

For more, see Charity homes built by Hollywood start to crumble.

Florida Lawmaker To Propose Foreclosure Mediation Bill In State Legislature Based On Philadelphia Diversion Program

In Punta Gorda, Florida, the Charlotte Sun reports:

• More than 500,000 Florida homeowners faced foreclosure proceedings in the first 10 months of 2008. State Rep. Paige Kreegel, R-Punta Gorda, believes he has part of the solution to the crisis.

• House Bill 205, based on a successful Philadelphia foreclosure diversion program, is being advanced by Kreegel as a means to help lenders and homeowners embroiled in the foreclosure crisis.

• "Something has to be done, and this is our first salvo into trying to do something about it," said Zachary Burch, Kreegel's legislative aide. Kreegel's Florida program would reduce foreclosures on owner-occupied residential properties by encouraging loan restructuring to allow borrowers to make regular payments again. It would allow Floridians to remain in their homes while protecting lender interests, too, according to Kreegel's office.

For more, see Homeowner, lender rights balanced by HB 205.

IRS To Ease Up On Squeezing Financially Stressed Taxpayers Owing Back Taxes

The Sacramento Bee reports:

• Can't pay your federal taxes? The IRS wants to help. Acknowledging the "difficult economic times," officials said Tuesday they're relaxing some rules to help financially stressed taxpayers dealing with job losses and other economic uncertainty.

Among the measures announced Tuesday:

• IRS employees now have "greater authority to suspend collection actions in cases where taxpayers simply cannot pay," said [IRS commissioner Doug] Shulman.

• Taxpayers may be allowed to skip a payment or obtain a reduced monthly payment, without automatically suspending their current installment agreement for paying back taxes. Previously, if a payment was missed or late, those agreements would be voided, with the full amount due.

• Given the steep drop in home values, the IRS has set up a unit to handle cases where a home's value has stymied efforts to reach an "offer in compromise."(1) A so-called OIC agreement allows a taxpayer to settle a tax debt for less than what's owed. "Anytime home equity is a roadblock to an OIC, we're going to take a second look," Shulman said. Also, taxpayers who are already in an OIC but cannot make their payments for hardship reasons will be offered options to avoid default.

• Taxpayers whose wages or bank accounts are being garnished for delinquent back taxes can request a hardship release. The IRS says it will work with taxpayers to speed up so-called "levy releases."(2)

For more, see IRS relaxes some rules for those in financial bind.

Go here for more on:

• IRS Offer-In-Compromise - see IRS Form 656 & Instructions (44 pages - 3.3 MB);
• IRS Payment Plans, Installment Agreements - see IRS Form 9465),
• The IRS Collection Process - IRS Publication 594 .

(1) An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles the taxpayer’s tax liabilities for less than the full amount owed. For an IRS advisory warning taxpayers to beware of promoters’ claims that tax debts can be settled for “pennies on the dollar,” see IR-2004-17: Check Carefully Before Applying for Offers in Compromise.

(2) A levy is a legal seizure of your property to satisfy a tax debt. Levies are different from liens. A lien is a claim used as security for the tax debt, while a levy actually takes the property to satisfy the tax debt. Go here for more on IRS tax levies.

City Of Memphis Joins Shelby County; Gives Go-Ahead For Discrimination Suit Targeting Major Home Lenders

In Memphis, Tennessee, Memphis Commercial Appeal reports:

• City Council members on Tuesday approved a resolution authorizing the city to file suit against national lenders who they say created a foreclosure crisis in Memphis and Shelby County that disproportionately affected African-Americans.

• The resolution alleges lenders engaged in "deceptive" and "discriminatory" lending practices targeted at the black community and "other select groups" that caused "substantial" and "irreparable" harm to neighborhoods and the governments.

• The Shelby County Commission recently approved a similar resolution (see Shelby commissioners authorize lawsuits against mortgage lenders), claiming the foreclosure epidemic has devastated neighborhoods, slashed property values, eroded the tax base and drained local government coffers because of a host of direct and indirect costs.

• "They have caused property values to plummet," said Webb Brewer from Memphis Area Legal Services, which is working with the city and county on the lawsuit. "As the property values go down, the property taxes go down. There are a lot of increased costs, like police and fire protection."

For more, see Council says OK to city lawsuit (Resolution alleges lenders targeted black community).

Go here, Go here, and Go here for other posts on alleged discrimination in real estate transactions. DiscriminationPredatoryLendingAlpha

Change Bankruptcy Law To Allow For Home Mortgage Cram Downs, Say 22 State AGs

Legal NewsLine reports:

• A coalition of 22 state attorneys general(1) asked Congress on Tuesday to loosen U.S. bankruptcy rules so judges can modify home loans to help reduce the tide of home foreclosures. In a letter to U.S. House and Senate leaders, the attorneys general called for an amendment to the U.S. Bankruptcy Code so federal judges can adjust home mortgages just as they can most other types of debts and loans.

In addition to the 22 state AGs, the District of Columbia AG also joined in the request, according to the story.

For more, see AGs urge Congress to amend Bankruptcy Code.

(1) According to the report, attorneys general from the following jurisdictions joined in making the request: Arizona, California, Connecticut, Delaware, District of Columbia, Illinois, Iowa, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, Montana, New Mexico, North Carolina, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Vermont, Washington and West Virginia.

Loan Modification Firm Accused Of Illegally Charging Minnesota Couple Upfront Fees To Avoid Foreclosure

In St. Paul, Minnesota, WCCO-TV Channel 4 reports on another casualty involving loan modification firms illegally charging homeowners facing foreclosure upfront fees to avoid foreclosure.

• The [homeowners] paid almost $2,000 to National Foreclosure Counseling Services three months ago. They haven't heard anything from them for weeks. Now, their home will go up for auction first thing Tuesday morning.

***

• Minnesota's Attorney General Lori Swanson has sued 10 companies in the last year for the very same thing. It's illegal in Minnesota for foreclosure consultants to charge anything until after they do something.

For more, see Mortgage Help Scam Now Costing Couple Their Home.

Connecticut AG Urges Passage Of New Law To Target Loan Modification, Debt Reduction Firms

From the Connecticut Attorney General's Office:

• Attorney General Richard Blumenthal [Tuesday] proposed legislation to fight predatory debt reducers that offer mortgage and debt rescue services that may actually cost consumers their homes. [...] Debt reducers are unregulated and often claim to offer services to rescue homeowners from foreclosure or severe debt.

• In some cases, debt reducers deceive consumers into relinquishing their homes, turning homeowners into tenants. In other cases, consumers pay expensive advance fees to debt reducers that fail to provide promised relief. Often, consumers report that oral promises fail to translate into consumer contracts.

• Blumenthal's proposal -- An Act Concerning Foreclosure Rescue and Debt Reducers -- would compel debt reducers to provide advance disclosures that clearly and conspicuously explain their services, and prohibit advance fees.

For more of the Connecticut AG press release, see Attorney General Investigates And Seeks To Stop Predatory Debt Reducers.

See also, The Connecticut Post: Blumenthal: Beware of debt-reduction companies.

NY AG Settles With Two Mortgage Brokerages, Files Suit Against Another For Alleged Race-Based, Discriminatory Lending Practices

From the Office of the New York Atttorney General:

• Attorney General Andrew M. Cuomo [Monday] announced results of a landmark investigation with the New York State Department of Banking into discriminatory practices in the mortgage brokerage industry.

• In the first law enforcement action of its kind in New York State, two mortgage brokerage companies – HCI Mortgage and Consumer One Mortgage – will collectively pay $665,000 in restitution to approximately 455 Black and Latino borrowers who were illegally charged higher fees than similarly-situated White borrowers. The companies collectively operate more than 20 branches throughout New York State.

• The Attorney General also filed a lawsuit in federal district court against another mortgage brokerage company – U.S. Capital Funding, LLC – that engaged in similar discriminatory practices.(1)

Go here for the NY AG press release: Attorney General Cuomo Announces Groundbreaking Agreement With Major Mortgage Brokers Who Discriminated Against Minority Customers (HCI and Consumer One to Pay Over $650,000 in Restitution After Illegally Charging Black and Latino Customers Higher Brokerage Fees; Cuomo Sues U.S. Capital Funding for Similar Discriminatory Practices).

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

(1) According to the NY AG press release, unlike HCI and Consumer One, U.S. Capital Funding failed to agree to provide appropriate relief to victims. Consequently, the Attorney General filed a lawsuit seeking restitution for over 100 minority borrowers and a court order requiring the company to cease its discriminatory practices. DiscriminationPredatoryLendingAlpha

Nigerian Scam Artist Swipes & Sells Deed To Cape Coral Lot; Leaves Listing Agent With Egg On Face, Title Insurer Holding The Bag

In Cape Coral, Florida, the News Press reports:

• Roberta Kunda thought she was buying a vacant lot in Cape Coral. Instead, $18,000 of her money went to a computer-savvy scam artist — possibly in Nigeria. Because she had title insurance, Kunda will probably get back her money from the 2007 purchase, but the incident highlights cracks in the real estate market and the risk from international scammers who are growing more sophisticated.

***

• Kunda went through a reputable RE/MAX realtor, paid for a title search and filed all the proper paperwork. But somehow, the real estate agent, title company and an underwriter on the title insurance all missed the fact that the seller was a scam artist who never owned the property [...]. Whoever posed as the seller on Kunda's property had the Deed Warranty notarized in Lagos, Nigeria. That address, [a manager at a local title agency] said, should have triggered a red flag. It did not.

For more, see Internet scammer sells Cape Coral residential lot for $18,000. KappaDeedTheft

Assisted Living Center Operator Files For Ch. 11 Protection; Future Of Senior Residents Uncertain

In Eugene, Oregon, The Register Guard reports:

• In a last-ditch effort to save his company, Sunwest Management CEO Jon Harder placed himself and 14 individual assisted living centers — including Alpine Court in Eugene — into Chapter 11 bankruptcy. In legal maneuvering that unfolded in the waning days of 2008, Harder sought an injunction to stop nine big investment banks from seizing the most profitable of the company’s nearly 270 assisted living centers across the country.

***

• While creditors haggle, 16,800 seniors in Sunwest centers around the country — including about 5,000 in Oregon and 600 in Lane County — wait to see how Sunwest’s collapse will affect their housing. [...] The 90-plus foreclosures or receivership actions pending against Sunwest affiliates have “put at risk the well-being of residents at Sunwest-related facilities,” according to court records.

For more, see Assisted living sites face legal challenges Sunwest Management (CEO Jon Harder files for Chapter 11 bankruptcy protection, including Alpine Court).

See also, Statesman Journal: Sunwest tries to halt foreclosure (Founder's bankruptcy filing is effort to protect senior living homes, court papers show):

• [T]he ongoing foreclosures and court judgments threaten to "result in a chaotic free-for-all in which the fastest creditors through the door will grab what they can and run," Harder's attorneys warned in court documents. [...] "This affords, in our opinion, the very best opportunity to have the least disruption to the lives of residents of the retirement facilities," said Stephen English, a Portland attorney who represents Harder.

Go here for other posts on the financially strapped Sunwest Management and its senior care facilities.

Using Statute Of Limitations To Wipe Out Lenders' Right To Foreclose A Mortgage?

In a recent story on MSNBC.com profiling Florida consumer foreclosure attorney April Charney and her approach to defending homeowners facing foreclosure, a point was made on the possible use of the statute of limitations to terminate a foreclosing lender's right to foreclose:

• Charney said that in a number of her cases, once there is no longer an ability for the loan servicer to profit, the foreclosure “just goes to sleep, and unless I’m going to pursue it, nobody’s setting hearings, nobody’s pursuing anything to get it to trial.”

• After five years, which is the statute of limitations to enforce a contract in Florida,(1) she can try to help her clients own their homes mortgage-free, Charney said. The first opportunity for her to help clients do that may arise next year.

• And that legal limbo is where the lion’s share of her cases stand now, Charney said. So far this year, she has achieved two “workouts” and lost two cases. “Many, many, many” of the rest are in sleep mode or getting a single filing each year by plaintiffs’ attorneys just to keep them alive.

For the story, see 'Angel' of foreclosure defense bedevils lenders (Florida attorney trains hundreds of others to help troubled borrowers) (for the entire story on one web page, try here).

(1) Sec. 95.11(2)(c), 95.281(1)(a), Florida Statutes. KappaMtgDocsMissing

NYC Attorney Disbarred For Stealing From Clients Refuses To Stop Practicing Law; Arrested Last Week For 3rd Time Since Losing License

In New York City, the New York Post reports:

• Practice doesn't necessarily make perfect. An elderly Manhattan lawyer, banished from the legal profession for stealing from clients, could spend his golden years in prison - because he refuses to stay out of the city's courthouses.

• At an age when most career attorneys have taken to the golf course, all 81- year-old Bertram Brown wants to do is work, something he is now alleged to have done three times under an alias since his disbarment.

***

• Brown, a Columbia Law grad and an attorney for nearly a half-century, surrendered to Brooklyn prosecutors last week for allegedly using a phony name to represent a client in a housing-court case.

• He's been without a license since April 2006, when he was disbarred for stealing $54,000 from a Queens man [William Ryan] who had hired him to stop the foreclosure on his Ozone Park home.

***

• Brown was also charged with stealing more than $20,000 from one of Ryan's neighbors, whom he represented in the sale of her Ozone Park home, authorities said.

For more, see COURT IN OB-SESSION (Crooked Attn'y Refuses To Stop Practicing).

Negotiated Short Sale By Real Estate Agent On Behalf Of Homeowner Facing Foreclosure Not A Violation Of Florida Foreclosure Rescue Law, Says State AG

Does Florida's new Foreclosure Fraud Protection Act(1) prohibit real estate licensees from being involved in short sales?

According to Florida Attorney General Bill McCollum, where the only remuneration sought by a real estate agent within the state in negotiating a short sale to assist a client in avoiding foreclosure is the normal real estate commission, and no additional upfront or other fee is sought for the negotiation or dialogue with the lender, that activity does not appear to fall within the scope of the Foreclosure Fraud Protection Act.

For more, see the AG's recent letter to the Florida Association of Realtors in which he expresses this position.

(1) Sec. 501.1377, Florida Statutes (eff. October 1, 2008).

New Jersey Woman Charged With Pocketing Elderly Mother's Housing Money Intended For Long Term Care Facility Where She Resided

From the Office of the New Jersey Attorney General:

• Attorney General Anne Milgram announced that an Ocean County woman has been indicted for allegedly stealing more than $6,000 from her elderly mother.

***

• The indictment alleges that [... Ann] Selk failed to remit payments on her mother’s behalf to the long-term care facility in which the mother was a resident. As a condition of her mother’s Medicaid eligibility, Selk was required to turn over the mother’s monthly Social Security and pension checks to the residential long-term care facility as partial payment for care. The indictment alleges that Selk failed to turn over $6,376 of her mother’s available income to the facility on behalf of her mother.

For the New Jersey AG press release, see Ocean County Woman Charged in Theft of $6,000 from Her Mother.

Amend HOA/Condo Docs To Mitigate Against Rent Skimming By Unit Owners Facing Foreclosure

Buried in a recent column in the Naples Daily News (Southwest Florida) is the following suggestion for condominium and homeowners associations who are being stiffed on their maintenance fees by non-owner occupant unit owners who, in turn, are sticking tenants into their premises and pocketing the rent while awaiting being ousted by a foreclosure sale:

• One way to help an association minimize the costs associated with these flipper/renter problems is to amend your declaration of condominium or declaration of covenants to allow the association to collect the rent directly from the tenant if an owner is past due on assessments and a claim of lien has been filed on the unit.(1)

***

• It is important to remember that an association can only collect the rent or evict the tenant if such power is contained in the governing documents. If your association does not have such powers in its documents, your board may wish to consider having its members vote on amending your documents to include such provisions at your next annual meeting.

For more, see Unit owner collecting rent but not paying association assessments.

(1) As part of any amendment, the association might consider tacking on a monthly manangement fee on any unit they are forced to collect rent on, if otherwise permissible under local law.

Attorney Malpractice For Obtaining Loan Modification From Lender Who Can't Prove It Owns The Promissory Note?

An article in the Decenber, 2008 issue of Trial Magazine highlights problems faced by lenders as a result of the mortgage securitization process that leaves them in a difficult spot whether they're attempting a foreclosure action against, or a loan modification with, a financially strapped homeowner. It also raises a question regarding an attorney's professional responsibility when representing a homeowner in these situations.

• [B]ecause of lenders’ bundling and reselling of mortgages, [promissory] notes are often lost, misplaced, or corrupted. As a result, many lenders can’t prove that they are owed payments and entitled to foreclose.

***

• “Losing a note is like losing cash,” said Mitchell Roth, a lawyer in Sherman Oaks, California. “The right to payment depends, with limited exceptions, upon the actual possession of the note. To defend against a foreclosure, the first line of defense is, ‘Show me the note.’ And show me how you have the right to payment under the note by proper endorsement or assignment.”

***

• Roth said confusion about the note holder is one reason lawyers should counsel their clients to avoid loan workouts or other negotiations offered by their banks or mortgage companies.

• “Why should we renegotiate unless we know that we are negotiating with the actual holder of the note?” he said. “In fact, I think lawyers are committing malpractice if they are negotiating with an entity that is not the original holder in due course in possession of the instrument.”

For more, see Homeowners bank on new ways to fight foreclosures (article reproduced and appearing on the website of The Consumer Warning Network).

In related posts, see:

• 12-29-08: Foreclosing Lender Can't Prove Ownership Of The Note? So What's The Big Deal???,
• 12-28-08: Judges, Homeowner Attorneys Begin To Wonder How To Do A Loan Modification When Lender Can't Prove Ownership Of Promissory Note?KappaMtgDocsMissing

Lack Of Diligence Means Another Process Server Screw-Up, Another Void Foreclosure

A 2006 decision of a Florida appeals court adds a little fuel to the fire for those who believe that screw-ups by process servers (as well as attorneys for foreclosing lenders who, contrary to what they may think, have some responsibility for supervising the actions of a process server) in the course of serving homeowners with the lawsuit paperwork (ie. summons and complaint) in foreclosure proceedings are not all that uncommon.

The case involved a permanent resident of Canada who owned a second home in Spring Hill, Florida, and who was facing foreclosure on that home. At the time of the attempted service of process, the home was unoccupied. Because the process server couldn't find the homeowner after a couple of attempts at the premises, and an attempt at a second location, a decision was made to serve the homeowner by publication of a legal notice in the local newspaper.(1)

In reversing the lower court and deciding that service of process was no good in this case, the court ruled that the process server failed to meet the minimum requirements for conducting a "diligent search and inquiry" for the whereabouts of the homeowner prior to resorting to service by publication.(2)

For the details on the process server's lack of diligence in conducting a search and inquiry in connection with the homeowner's whereabouts in this case (sorry, no "easy-to-read" media report for this story; court decision only), see Godsell v. United Guar. Residential Ins., 923 So. 2d 1209; 2006 Fla. App. LEXIS 3884; 31 Fla. L. Weekly D 812 (5th DCA 2006).

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

Go here for other posts on process server screw ups.

(1) Pursuant to Sections 49.021-.041, Florida Statutes.

(2) The court indicated that the plaintiff must prove that it made “an honest and conscientious effort, reasonably appropriate to the circumstances, to acquire the information necessary to fully comply with the controlling statutes,” and that "it is basic that to constitute diligent search and inquiry to discover the whereabouts of a party, that inquiry should be made of persons likely or presumed to known [sic] such whereabouts." foreclosure faulty notice ScrewUpProcessServing

Mortgage Payoff "To Do" List

In a recent Q&A column, attorney/syndicated real estate writer Benny L. Kass gives this "to do" list when paying off a mortgage:

1. Make sure that your mortgage/deed of trust is formally released from the land records in the county where your house is located. Ask your former lender to confirm that they arranged for this release (If you are having trouble determining whether the release/satisfaction was filed, the local recorder of deeds may be of assistance.),
2. You should get your original promissory note and deed of trust returned to you, marked "paid and cancelled;"(1)
3. Advise your county real estate tax office to start sending you the real estate tax bills;
4. For those who had automatic bank withdrawals to pay your mortgage, make sure to stop these payments immediately.

For those of you looking to take advantage of the current low fixed rate mortgages available and are thinking of refinancing, you might want to keep the foregoing points in mind.

Source: Real Estate Mailbag (last Q&A in the article).

(1) I wonder how many homeowners actually realize that they are entitled to get back their original promissory note. Also, I wonder how many would be successful in getting back their original note nowadays, given that many of the geniuses in the mortgage industry (ie. lenders, servicers, securitizers, Wall Street wizards, etc.) never bothered to physically keep track of the loan documents after the mortgage was consummated, and have no clue whether they actually lost them, or merely forgot where they stashed them (possibly in a dumpster).

For an example of how clueless some in the mortgage industry are, see The Associated Press: American Home under fire over loan files, where a mortgage lender, through its legal counsel, makes an idiotic request of a bankruptcy court for permission to actually dump the original documents for 490,000 mortgage loans. KappaMtgDocsMissing

Difficulty Tracing Title To Home Involving Securitized Foreclosed Mortgage Stalls House Closing

In Minneapolis, Minnesota, FOX9 reports:

• A Twin Cities couple is hoping to turn a foreclosed home into a home, but it has not been easy. Three different closing dates have fallen through. [...] In the Waite Park neighborhood in northeast Minneapolis, a little cottage on Benjamin Street has been sitting empty since spring. Heather Playman and her husband would love to buy it. In fact, they even have a purchase agreement, picking it up two months ago for a relative steal at $165,000.

• But the bank won't close on the deal. The problem is with the paperwork: the title and the deed. Wachovia used to own the house, now it's Fannie Mae. The city of Minneapolis says it’s a common problem that keeps hundreds of homes in limbo. "Many mortgages were bought and sold between lenders over and over again and it is difficult to trace the title."(1)

For more, see Bank Ownership of Foreclosed Homes Causing Confusion (Closing dates missed on NE Minneapolis home owned by Fannie Mae).

(1) Given the gigantic mess created by the mortgage lending industry in this regard, I wonder how many in the title insurance industry (ie. underwriters, agents, closers, etc.) there are who are having a problem insuring the titles to homes that have a recent foreclosure appearing in the chain of title. Based on this story, there apparently is at least one who's having a problem. Are there any others??? KappaMtgDocsMissing

Oregon Equity Stripper Cops Plea; Now Faces Foreclosure Himself

In Portland, Oregon, Willamette Weekly reports:

• Larry Jason Somera did something a week before Christmas that rarely happens in Multnomah County Circuit Court—he pleaded guilty to a mortgage-related crime.

***

• Somera, a 35-year-old former mortgage broker, first attracted the attention of law enforcement after two 2006 home purchases from the elderly and disabled. In one deal, he and a partner bought the 1,300-square-foot Northeast Portland home of Evelyn Allen, a 73-year-old blind woman who faced foreclosure. They made a gross profit of $155,000, most of which they paid to Allen only after Allen’s family sued.

• That same year, Somera and a partner bought the St. Johns home of an 80-year-old Portland man suffering from dementia. They paid $125,000, $45,000 less than it was worth, according to court records. After the man’s financial adviser challenged the purchase in court, Somera and his partner gave the home back.

• Shen ultimately charged Somera with first-degree forgery, a Class C felony, for concocting a bogus rental agreement as collateral for the loan on a third property. [...] Somera, whose pitch in 2006 to Allen was rescue from foreclosure, now also faces the loss of his home.

For more, see Grounded Vulture (One “foreclosure-rescuer” pleads guilty in 2008. Will there be more in 2009?).

For an earlier story on this case, see Rescue Me (A Portland Cop is targeting foreclosure vultures).

San Diego-Area Foreclosure Rescue Operator Faces Felony Charges For Allegedly Screwing 17 Homeowners In 150 Year Old Land Patent Scam

In San Diego, California, KGTV Channel 10 reports:

• A man accused of stealing more than $100,000 from people in a land patent foreclosure scam pleaded not guilty Wednesday to numerous felony charges involving the 17 alleged victims. Larry Smith, 60, allegedly told people who came to his seminars that if they gave him thousands of dollars, he would help them buy a land patent so the bank couldn't foreclose on it.

***

• Five others are charged in the case with Smith, although only one has been arrested, [Deputy District Attorney Marlene] Coyne said. The prosecutor said she believes there are more people allegedly victimized by Smith, who have not yet come forward.(1)

For more, see Man Pleads Not Guilty In Alleged Foreclosure Scam.

See also, KTNV-TV Channel 13 (Las Vegas): Accused foreclosure con man busted (A man accused of preying on vulnerable victims desperate to save their homes is in jail following an investigation that spanned two states. Authorities say 60-year-old Larry Smith held seminars in real estate offices in Las Vegas and San Diego where he reportedly took hundreds of thousands of dollars from people in dire straits).

For related KGTV Channel 10 reports on this case, see:

• December 22, 2008: Man Takes Alleged Land Patent Scheme To Other States (Larry Smith Accused Of Using 150-Year-Old Scam On Foreclosure Victims),
• July 17, 2008: I-Team Pursues Man Suspected In Land Patent Scheme.

(1) Smith was charged with conspiracy to commit grand theft, conspiracy to commit deceitful practices by a foreclosure consultant and numerous counts of grand theft.

Atlanta Man Faces Theft By Deception Charges For Allegedly Taking Money From 11 Homeowners Facing Foreclosure, Failing To Deilver On Promises

In Atlanta, Georgia, Fox5 News reports that a man who made money off of people about to lose their homes to foreclosure has been arrested.

Dwayne Green, of Maximus Investment Group, has been charged with one felony count of theft by deception for taking $18,000 from one homeowner facing foreclosure, and one misdemeanor count of theft by deception for pocketing lesser amounts from ten other financially strapped homeowners. He failed to deliver on promises to help save homeowners out of foreclosure.

For the story (video only), see I-Team Maximus Arrest. loan modification

Arizona Man Faces Charges Of Pocketing Upfront Fees For Allegedly Phony Loan Modification, Foreclosure Help

In Glendale, Arizona, KNXV-TV Channel 15 reports:

• Arizona Attorney General Terry Goddard announced Wednesday that a Glendale man has been indicted on charges related to a mortgage assistance scam.(1) Peoria police arrested Bobby John Herrera, 33, late Tuesday.

***

• Investigators said Herrera solicited 10 Valley homeowners facing foreclosure by making fraudulent claims that he could modify mortgage terms or provide other assistance to help them keep their homes. Herrera often charged the victims upfront fees of $1,245, according to the Attorney General's Office. The suspect is alleged to have not provided any foreclosure relief assistance or mortgage loan modifications as promised.

For more, see Attorney General: Glendale man victimized struggling homeowners.

From the Arizona Attorney General's office:

• Indictment: State of Arizona v. Herrera,
• Press Release: Glendale Man Indicted for Mortgage Loan ‘Assistance’ Scam.

(1) Herrera has been indicted on:

• one count of fraudulent schemes and artifices (ie. knowingly obtaining any benefit by means of false or fraudulent pretenses, representations, promises or material omissions, pursuant to a scheme or artifice to defraud, in violation of § 13-2310, of the Arizona Revised Statutes),
• one count of money laundering (A.R.S. § 13-2317 ),
• one count of illegal control of an enterprise (A.R.S. § 13-2312(A)), and
• six counts of theft (A.R.S. § 13-1802(A)(1)).

Foreclosure Rescue Arrangement Leaves Los Angeles Homeowner Facing Eviction

In Los Angeles, California, the CBS Evening News reports:

• Alexendria Craig's house is full of memories. It was her parents' home and she inherited it when they died. A picture of her great grandfather sits on the mantle. Now she is about to lose that home after taking out a series of high interest loans that have left her hopelessly in debt.

***

• Desperate to hold onto her house, she answered a slick sounding ad that turned out to be too good to be true. Craig agreed to pay $30,000 and to share title on her house to a foreclosure rescue company. The company said it would use equity in her house to pay off her debts, and that her credit would be repaired. After a year she thought she'd get her house back.

***

• Her house is in foreclosure, and next week she's facing eviction. Both the foreclosure rescue company and the bank foreclosing on her house deny any wrongdoing.

For the story, see For Desperate Homeowners, Scams Abound (How A Company Promising Help Cost One Woman Her American Dream). Go here for video. loan modification

St. Paul Homeowner Facing Foreclosure Opts For Free City Housing Counselor For Help; Proposal From Loan Modification Firm Didn't Feel Right, She Says

In St. Paul, Minnesota, Minnesota Public Radio reports:

• When a man called Crystal Brown out of the blue promising to modify her loan, the St. Paul single working mother of three thought he was a godsend. "He was very smooth, very nice, very understanding, not critical," Brown said. "He would lead you to believe he's 100 percent on your side, like he's really fighting for you."

***

• He identified himself as an employee of KirkLand Young, a loan modification company based in Miami Beach. Brown agreed to let him fax over some paperwork, and she almost signed the contract. But once she read it, Brown saw that she would have to pay a non-refundable fee of $500. If she accepted the new mortgage, she would have to spend an additional $1,200.

***

• She said something didn't feel right about the arrangement. Brown never sent in the papers. Instead, she sought help from a foreclosure counselor with the city of St. Paul, who offered to work with the lender at no cost.

For the story, see Companies vow to change mortgage terms -- for a price (Loan-modification companies can charge thousands of dollars for this service, even though many nonprofits will do it for free. Housing advocates say the firms represent the latest form of industry predators).

Go here for the contract Crystal Brown refused to sign.

Foreclosure Scams Growing, Continue Hitting Northern California

In Napa County, California, the St. Helena Star reports:

• Rising foreclosure rates in Napa County are supplying scam artists with a steady stream of victims. Willing to do anything to keep their homes and get out of mortgages they cannot afford, these homeowners’ desperation is fodder for deceit.

• “It’s certainly a growing problem, not just here in Napa but throughout the state and country,” Napa County District Attorney Gary Lieberstein said. “It is a reflection of the mortgage scams that we’ve seen coming around nationwide, as well as the financial status of our economy right now.”

***

• [Associate director for Fair Housing Napa Valley Steve] Cogswell said it is impossible to know how many people in Napa County have been targets of foreclosure scams. Fair Housing Napa Valley has had 55 cases in the last 12 months, but “that’s just the people that happen to end up coming in to us,” he said. Many times, the scams go unreported, either because victims don’t realize they’ve been victimized or because they don’t know where to go.

For more, see Foreclosure schemes growing.

One Dead, One Jailed At Illegal "Pay At Door" Bash At Hillside Mansion In Foreclosure; Catered Events In Defaulted Upscale Homes More Common, Say Cops

In Los Angeles, California, the Los Angeles Times reports:

• Los Angeles police have arrested a man in the shooting death of a onetime local basketball star at a heavily promoted New Year's Eve party at a rented Coldwater Canyon mansion.

***

• The shooting [...] is the latest incident involving so-called party houses, sprawling hillside mansions that host illegal, professionally catered and paid events. [...] Police described [the alleged shooter] as a friend of a female party promoter who organized the New Year's bash at the hillside estate on a winding street of three- and four-story houses with canyon and ridge-top views. The property, police said, is in foreclosure.

***

• Police described the event as a "pay-at-the-door, illegal party," a type that has become increasingly popular during the real estate foreclosure crisis. "Unfortunately, we're seeing these in foreclosed homes," Hamilton said of the parties. "You get what you get in that type of situation."

• Fliers for the party invited guests to a "Winter Wonderland," according to several area residents, who declined to be identified. The fliers also requested that partygoers "dress to impress" and advertised appetizers and an open bar.

For more, see Man held in slaying at Coldwater Canyon party in Los Angeles (Police say a dispute over food at an illegal event in a foreclosed mansion escalated into violence. The victim, Felix L. Lang Jr., was a former star basketball player at Valley College).

See also, The Associated Press: Man held for shooting death at New Year's party.

Go here for other posts on vacant or foreclosed homes being used for unauthorized parties. teen parties vacant homes

Connecticut Warns Consumers Against Unsolicited Mortgage, Credit Card Debt Assistance; False Offers Of Help Are A "Scavenger Hunt" Says State AG

From the Office of the Connecticut Attorney General:

• Attorney General Richard Blumenthal issued an urgent consumer warning [last week] about unsolicited calls to consumers offering reduced rates on mortgages or credit card debt.

***

• "Our advice to consumers: hang up on unsolicited offers," Blumenthal said. "This scam victimizes our most vulnerable citizens -- homeowners desperate to save their families and escape financial ruin. This reprehensible ruse -- false promises of reduced rates on mortgage and debt -- is actually a scavenger hunt for private, personal information on consumers that may be illegally exploited. Consumers who divulge details hopeful for better lives will find only deeper financial ruin."

For the Connecticut AG press release, see Attorney General Issues Consumer Alert On Mortgage And Debt Rescue Scam. loan modification

Missouri AG Brings Civil Suit Against Homebuilder For Allegedly Pocketing Customer Cash & Either Failing To Perform Work Or Doing So In Shoddy Manner

From the Office of the Missouri Attorney General:

• The Franklin County Circuit Court has entered an order against homebuilder Jason Woods that prevents him from doing any home repair or construction in Missouri while a lawsuit brought by the Attorney General's Office is pending.

• The lawsuit,(1) filed in October, alleges that Woods, who does business as Timber Ridge Construction, took money for home repair or construction projects from consumers but then either failed to do the work or did the work in a shoddy manner.

For the Missouri AG press release, see Preliminary injunction prevents homebuilder accused of fraud from doing business while AG lawsuit is pending.

For more 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 Missouri AG press release, the lawsuit alleges that Woods entered into a contract with one consumer in which Woods was paid a total of $138,951 to construct a new home on property owned by the consumer. However, Woods allegedly failed to complete the construction of the house per the specifications listed in the agreement; and the work completed was also alleged to have been done using poor workmanship. The lawsuit also alleges the defendant entered into a contract with another homeowner couple to construct a storage building on the couple's property. The couple paid Woods a total of $30,000 to construct the structure, but he failed to do so, according to the AG's press release. StiffingContractorsTheta

Massachusetts AG Continues Effort Against Housing Discrimination

Massachusetts Attorney General Martha Coakley's Office has recently issued news releases in connection with its efforts targeting housing discrimination:

• AG Coakley Obtains Consent Judgment Against Cambridge Realty Company in Housing Discrimination Case: Resolved claims that company discriminated against a disabled Cambridge resident by refusing to rent her an apartment because it did not want to accept the lease requirements of the state-assisted housing program. The consent judgment permanently prohibits Oxford Street Realty, Inc. and its President, Jeffrey Indeck, from discriminating against tenants who have federal or state housing subsidies and requires defendants to pay the tenant $35,000 in damages.

• AG Coakley Obtains Consent Judgment Against Pittsfield Property Owner in Housing Discrimination Case: Resolves claims that Wahconah Grove Realty Trust and its property manager, Douglas Malins, violated state antidiscrimination laws by discriminating against a tenant on the basis of race. The defendants have agreed to pay $10,000 to the tenant as part of the settlement of the case. The complaint alleged that Malins prohibited a tenant’s grandson, who is biracial, from visiting her apartment and that he interfered with the tenant’s right to have African-American guests at her apartment.

• AG Coakley Obtains Consent Judgment in Sexual Harassment Case Against Property Owner and Management Company: Resolves claims against the management company and property owner of a 250-unit apartment complex in Cambridge involving allegations of unlawful discrimination against a tenant and her daughter by allowing an employee to sexually harass them.

Feds Put Squeeze On Vegas Landlords Accused Of Discriminating Against Families With Children; Tenant Gets $30K Settlement To Resolve Claims

In Las Vegas, Nevada, the Las Vegas Sun reports:

• The federal government recently settled a complaint against the owners of Las Vegas apartments who allegedly discriminated against families, the third such case in the valley in two years.

• The repeated cases involving hundreds of apartments mean “there definitely is discrimination against families with children” in the Las Vegas Valley, said Chuck Hauptman, a representative of the Housing and Urban Development Department’s San Francisco office of fair housing and equal opportunity.

• He said the agency wants valley landlords to be on notice that this is illegal, a message that’s especially crucial when families with children are among the many seeking rental housing in the wake of the valley’s foreclosure crisis.

• In the most recent case, which was settled in October, HUD, rather than the victim, had filed the complaint, indicating the alleged discrimination was flagrant and easy to prove.(1)

For the rest of the story, see U.S. strikes at landlord bias against children (HUD gets payments to families, message to apartment owners).

(1) According to the story, the allegations were resolved when the landlord agreed to pay the tenant $30,000 and to set aside money for any other victims, as well as to stop the policy of not renting to children. In another case, HUD allegations were reportedly resolved when the landlord agreed to pay $75,000 total to four families the apartment management evicted or attempted to evict. Some of the settlement money was set aside to compensate any victims who come forth in the future.

Failure To Report Living Companion Leads To Hot Water For Alleged Housing Assistance Cheats

Recent Ventura County, California District Attorney prosecutions of housing assistance fraud:

• Nina Marie McMahan was sentenced to one year in the county jail as a result of her guilty plea to a charge of grand theft. McMahan was also placed on felony probation for 36 months and ordered to pay restitution of $49,660 to two public assistance agencies. Under penalty of perjury, McMahan failed to report that her husband was living at the residence and failed to report his earned income as part of the total household income. Go here and go here for the press releases.

• AnnaMarie Tamayo was arrested for felony grand theft for housing assistance fraud. Tamayo is alleged to have received $3,051 in public assistance funds over a three-month period for which she was not legally entitled. Tamayo allegedly failed to report that her boyfriend, who was on felony probation, was also living at the residence. Tamayo was required to report any changes in her household composition to the local Housing Authority within 10 days. Housing authority rules and regulations preclude individuals with a felony conviction from residing in public assistance housing. Go here for press release.

• Juana Nunez was arrested pursuant to a felony warrant for welfare fraud and housing assistance fraud. Nunez is alleged to have received $152,576 in public assistance funds from the two separate government programs for which she was not legally entitled over a period spanning ten years. Nunez allegedly received $19,556 in food stamps for which she was not entitled and also allegedly received $133,120 in housing benefits from the Ventura Housing Authority for which she was not legally entitled. Under penalty of perjury, Nunez failed to report that her boyfriend was living at the residence and failed to report his earned income as part of the total household income. Go here for press release.