Baltimore, St. Paul Among At Least 18 Cities Forming Litigation Work Group To Hammer Mortgage Lenders Over Vacant & Abandoned Foreclosures

In Baltimore, Maryland, The Maryland Daily Record reports:

• Baltimore’s law department is partnering with 18 cities across the country to use litigation to address the foreclosure crisis. City Solicitor George A. Nilson spoke Monday afternoon in support of a City Council resolution that was to have been introduced at Monday evening’s meeting that establishes a “Multi-City Litigation Work Group on Foreclosures” and would include officials from Chicago, Atlanta, Memphis and other cities.

• “The purpose and the importance of it is to do, at the city or municipal level, what has been done at the state level, and that is to deal with common problems of consequence in a coordinated manner rather than in an ad hoc manner,” Nilson said.

• The idea for the work group came from officials in St. Paul, Minn., who are considering litigation against the six major lenders that own the most vacant property in that city, including Wells Fargo, USBank, Deutsche Bank, HSBC and Chase.

For this story, see City joins 18 jurisdictions across U.S. in fighting foreclosures.

******************

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

• St. Paul is helping to create a national working group of city attorneys who are trying to hold lenders accountable for the accumulation of vacant and foreclosed-on homes in urban areas.

• The idea is for the chief legal officers — some of whom have filed lawsuits against lenders — to share information and coordinate legal strategies that might decrease foreclosures and vacancies. A City Council resolution of support for St. Paul's participation in the working group is expected to be introduced this week.

***

• John Choi, the city attorney in St. Paul, has been appointed to co-chair the working group along with his counterpart in Baltimore, and city officials expect other municipalities to announce their involvement in the coming weeks.

For this story, see St. Paul / City goal to curtail vacant properties (National group to seek solutions).

See also, Minnesota Lawyer: St. Paul announces the launch of multi-city foreclosure litigation initiative.

Memphis Loan Modification / Foreclosure Rescue Firm Agrees To Temporary Injunction With Tennessee AG; Will Stop Clipping Homeowners For Upfront Fees

In Memphis, Tennessee, Memphis Commercial Appeal reports:

• Memphis mortgage rescue company Patrick & Patrick Loss Mitigation Services has agreed to stop what the Tennessee Attorney General charged in a Nov. 18 lawsuit (go here for the Tennessee AG's Nov. 18 press release; here for the Tennessee AG's lawsuit; and here for Motion for Temporary Injunction & Asset Freeze) were illegal activities.

• According to the temporary injunction agreed to Tuesday by the firm and the attorney general, the firm may not engage in unfair or deceptive business practices, practice law, offer credit services without registering a bond with the state and must tell consumers in writing what services the firm and its people have provided before getting paid.

For more, see Memphis mortgage rescue company agrees to stop 'illegal practices.'

For Tennessee Attorney General Bob Cooper's January 13, 2009 press release, see: Tennessee Foreclosure Rescue Company Enters Agreed Order to Halt Alleged Unlawful Activities.

The Sloppiness Continues For Attorneys Representing Foreclosing Lenders; "They Are Totally Disorganized!" Says Florida's 12th Judicial Circuit Chief

In Sarasota, Florida, the Sarasota Herald Tribune reports:

• [T]he foreclosure glut is so bad that the law firms that specialize in handling the court cases in bulk for lenders are now too busy. They even let many foreclosure cases stall and remain inactive for months or years, if resident homeowners put up any sort of legal fight.

• [Florida's 12th Judicial Circuit Chief Judge Lee] Haworth says those law firms are apparently even failing to read [his] official written notifications [...]. Notices about local courtroom rules changes, like Haworth's requirement that there be a mediation meeting with a homeowner before a foreclosure can proceed, seem to go unread.

• "They are totally disorganized," Haworth said. They seek court hearing dates that the new rules say they are not entitled to, and seem clueless about it all.

For the story, see Troubled mortgages burdening the courts.

For Chief Judge Haworth's official notifications and links to the forms now required to be filed by attorneys representing foreclosing lenders within Florida's 12th Judicial Circuit (Sarasota, Manatee, and Desoto Counties), see:

• Chief Judge's Letter To Attorneys Summarizing New Foreclosure Procedures And Administrative Orders,
• Administrative Order Establishing Circuit-Wide Homestead Foreclosure Conciliation Program,
• 12th Judicial Circuit's Foreclosure Forms Section (links to required forms and procedures for 12th Circuit foreclosure actions),
• Go here for the 12th Judicial Court's website.

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

For posts that reference the failure of mortgage lenders and their attorneys to file the proper paperwork when bringing foreclosure actions, Go Here, Go Here, Go Here, Go Here, and Go Here. KappaMtgDocsMissing

Fannie Unveils Its "No Boot" Policy For Eligible Tenants In Foreclosed Homes; Renters To Choose Either Month-To-Month Lease Or "Cash For Keys"

In Washington, D.C.:

• Fannie Mae [Tuesday] announced the establishment of a new National Real Estate Owned (REO) Rental Policy that will allow qualified renters in Fannie Mae-owned foreclosed properties to stay in their homes.

***

• The new policy applies to renters occupying foreclosed properties at the time Fannie Mae acquires the property. Renters occupying any type of single-family property will be eligible including residents of two- to four-unit properties, condos, co-ops, single-family detached homes and manufactured housing. Eligible renters will be offered a new month-to-month lease with Fannie Mae or financial assistance for their transition to new housing should they choose to vacate the property. The properties must meet state laws and local code requirements for a rental property.

For the Fannie Mae press release, see Fannie Mae Announces National REO Rental Policy (Renters in Fannie Mae-Owned Foreclosed PropertiesEligible to Stay in Their Homes).

Go here for Fannie's National Real Estate Owned Rental Policy Frequently Asked Questions.

New Jersey Sets Aside $12M To Train, Pay For Attorneys, Counselors In Statewide Foreclosure Mediation Program

In Trenton, New Jersey, Legal Newsline reports:

• Eligible New Jersey homeowners will be able to use a new state-supported mortgage foreclosure mediation program(1) aimed at helping homeowners remain in their homes.

***

• The program is supported by $12.5 million in state funds, $12 million of which will be used to train and pay for housing counselors and lawyers through the New Jersey Housing and Mortgage Finance Agency. The other $500,000 will be used to provide foreclosure mediator services to homeowners.

• Eligible homeowners will be provided lawyers to consult with housing counselors in proposing ways to resolve mortgage delinquencies. Homeowners and lenders who are unable to resolve their disputes out-of-court will [ap]pear before a neutral court-appointed mediator. To be eligible for the mediation program, homeowners must not be in bankruptcy, the homeowner's primary residence must be the property facing foreclosure, and the residence must be a one to three-family residence.

For the story, see N.J. homeowners to receive state supported foreclosure media.

(1) Reportedly, the program is a joint effort of the Judiciary, the Office of the Attorney General, the Housing Mortgage Finance Agency in the Department of Community Affairs, the Public Advocate, the Department of Banking and Insurance, and Legal Services of New Jersey.

DC Man Gets 12+ Years In Deed Theft Scam Targeting Deceased Owners; Victimized Families Forced To File Civil Suits To Properly Restore Property Titles

From the Office of the U.S. Attorney (District of Columbia):

• A District of Columbia man, Duane McKinney, [...] was sentenced [last week] to 150 months in prison on charges of fraud, theft, and monetary transactions,(1) [...].

***

• The government's evidence at trial established that Duane McKinney obtained title to about $1 million worth of D.C. and Maryland properties through forged deeds, that is, deeds which purported to be signed by the owners transferring the properties to McKinney or his shell business. In fact, the deeds were not signed by the owners; the vast majority of the owners were deceased at the time of the forged and false deeds.

• McKinney was assisted by Joe D. Liles,(2) who would sign his name to these false deeds as the "notary" falsely stating that he saw the owner sign the deeds as grantor and that the owner "personally appeared before him." Once the deeds were notarized, McKinney would then sell the properties as if they belonged to him or his business and would use the money for himself.

• Some of those who purchased the homes lost all of their purchase money;(3) others whose families owned the homes for generations were required to file suit against McKinney to regain their properties.

For the press release, see District of Columbia man sentenced to prison on charges of theft, fraud, and money transaction offenses relating to forged property deeds.

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

(1) McKinney was also ordered to pay $912,630.75 in restitution and to forfeit to the United States three luxury vehicles and two real properties; the court also ordered two money judgments in the amounts of $770,872 and $59,000.

(2) Liles was sentenced to 180 days, execution of sentence suspended, three years probation, and to pay restitution of $691,587, according to the press release.

(3) The press release is silent as to whether the unwitting homebuyers bore the entire loss of their purchases, or whether they obtained a title insurance policy (which would have likely insured their title against this type of scam), in which case the title agent & underwriter issuing the insurance may be left on the hook for the loss. KappaDeedTheft

Maryland Victim Of "Money Store" Equity Stripping Scam Loses Battle Against Lender Seeking Mortgage Foreclosure

The Maryland Court of Special Appeals ruled last week against a homeowner fighting to save her home from foreclosure where her financial predicament was exacerbated by seeking help from a now-defunct foreclosure rescue operator.(1)

The court decision addressed the application of Maryland's Protection of Homeowners in Foreclosure Act (PHIFA), and how it applied as against a foreclosing lender.(2) The court ruled that PHIFA did not void the foreclosure rescue transactions, but rather made them voidable as to persons with notice. The mortgagee, the assignee of the lender who provided the financing in the foreclosure rescue, equity stripping scam, was held to be a bona fide purchaser/lender, and accordingly, was not subject to the homeowner's right of rescission.

In seeking to disqualify the foreclosing lender as a bona fide purchaser/lender without notice, the homeowner contended that the foreclosing lender had notice of the alleged fraudulent scam by reason of the fact that the foreclosure rescue operator, the closing agent, and/or the straw buyer were agents of the lender and their knowledge was imputed to it.

Alternatively, the homeowner contended that the foreclosing lender was on notice of sufficient facts to impose a duty to make appropriate inquiries, and failed to do so, thereby disqualifying it as a bona fide purchaser/lender and preventing it from foreclosing.

The court rejected both contentions.

For the court decision, see Julian v. Buonassissi, No. 2740, Court of Special Appeals of Maryland, 2009 Md. App. LEXIS 2 (January 5, 2009).

(1) The alleged scam was one involving the notorious Metropolitan Money Store, of Lanham, Maryland.
(2) Maryland Code (2005, Supp. 2006), § 7-301, et. seq. of the Real Property Article.

Cramdowns & Lien Stripping Of Home Mortgages Under Existing Bankruptcy Law

Buried at the end of a recent story in The Wall Street Journal contains an excerpt referencing how the existing bankruptcy rules can be used when stripping second mortgages from "underwater" real estate(1) (either owner-occupied or investment properties), and how the current bankruptcy cramdown rules (unless changes currently under consideration are enacted) can only be used to modify (ie. cramdown) existing first mortgages on investment properties and not those that are owner-occupied:

• Samuel Schwartz, a Las Vegas bankruptcy lawyer, has a client who is facing foreclosure on her primary residence even though she has been able to modify the loans on her two investment houses. Under the current bankruptcy rules, she was able to "strip away" the second mortgage on one of the investment homes and she "crammed down," or reduced, the principal balances on the first mortgages for both rentals -- reducing her combined loan balances to a total of $355,000 from $590,000.

• She was also able to strip away the second mortgage on her primary residence but couldn't modify the first mortgage. That mortgage, Mr. Schwartz said, is more than $100,000 above the current value of the property. Thus, she still may lose her own home. Under the [proposed] new law, her first mortgage on her home also could be modified.

For the story, see Power to Modify Mortgages Sits Well With Judges.

(1) Property that is worth less than the amount owed on the existing mortgage(s) encumbering the real estate.

Two Loan Modification Firms Resolve Issues With Colorado AG; Agree To Refund $30K To Homeowners, Pay $10K In Investigative Costs

In Denver, Colorado, Rocky Mountain News reports:

• Two companies collecting money to help homeowners avoid foreclosure have reached agreements with Colorado Attorney General John Suthers, [...].

• Suthers announced Sunday that Castle Rock-based Hawk Financial Services agreed to pay $26,500 in fees unlawfully collected from 31 customers before performing any service. Suthers also collected $10,000 in penalties, costs and attorneys' fees. Infinity Funding Group of Bohemia, N.Y., agreed to refund a $3,500 payment collected up front from one customer.

Source: Attorney General reaches settlement with mortgage companies.

San Diego Media Outlet Looks Into Area Loan Modification Firm

In San Diego, California, XETV-TV Channel 6 recently reported on My Safe House, a loan modification firm in Oceanside that charges homeowners an upfront fee of $2,995. Channel 6 spoke to a former telemarketer who worked for the firm and obtained a telemarketing script reportedly used by the firm to reel in financially strapped homeowners.

For the story, see They Promise a Safe House But Do They Deliver? (read text) (watch video).

Go here for the firm's telemarketing script.

Homeowner's Complaint Alleging A Lease-Buy Back Foreclosure Rescue Scam Among Several Being Probed By Connecticut AG

In North Stonington, Connecticut, The Day reports on a financially strapped homeowner who did business with a Massacusetts company that led him to believe that it would help keep him from losing his long-time family home.

• [Connecticut AG Richard] Blumenthal said in a phone interview that he is investigating [Gary A.] Gudat's case, along with other complaints involving a company called S.K.A. Properties Inc. of Attleboro, Mass., which Gudat alleges bilked his 76-year-old mother out of her nest egg and left him and a disabled sister, Debra Durocher, without a place of their own.

For the story, see Scam Cost Him His Home, Now He Wants Law Passed (Former N. Stonington man's case prompts Blumenthal to propose debt-reduction legislation).

See also, The Patriot Ledger: Debt reduction companies draw scrutiny (Conn. AG probing complaints about 1-2-3 Fix My Loan of Sharon and company in Attleboro):

• Connecticut Attorney General Richard Blumenthal is investigating complaints of predatory lending practices by a pair of Massachusetts companies. Blumenthal said he has received complaints about 1-2-3 Fix My Loan of Sharon and S.K.A. Properties of Attleboro.

***

• Mark Parker of Easton, the president of 1-2-3 Fix My Loan, said in an interview that he will no longer accept up-front fees from clients in Connecticut or Massachusetts. “We are changing our policy to meet their guidelines as per Blumenthal’s statement,” Parker said.
  Steven Dellacroce of Attleboro, who is listed as the president of S.K.A. Properties, does not have a listed telephone number.

Baltimore/D.C. Area High On Troubled Commercial Property Hit List

In Baltimore, Maryland, Baltimore Business Journal reports:

• The Baltimore-Washington, D.C. region ranks fifth in the nation for metropolitan areas hardest hit by the nationwide credit crunch, with more than 160 properties in financial trouble or at risk for foreclosure, according to a new study. Industry research firm Real Capital Analytics identified 162 distressed or potentially troubled assets in the region, representing more than $4 billion in commercial real estate.(1)

***

• Named in the report is General Growth Properties Inc., a Chicago-based real estate investment trust selling off a number of its marquee properties to raise money and pay down $900 million in debt scheduled to come due in February. Among the properties it has put on the market are Harborplace and the Gallery, two prime retail locations along Baltimore’s Inner Harbor.

For more, see Commercial real estate credit crunch lands Baltimore on troubled assets ‘radar.’

(1) Reportedly, the firm identified the properties as part of its Troubled Assets Radar. The tracking system was created to identify investment opportunities for interested buyers.

$100M Class Action Suit Filed Against L.I.-Based Loan Modification Company; Described As More Of A Sales Operation Than Professional Services Firm

In downstate New York, Crain's New York Business recently ran a story about American Modification Agency (AMA), a Long Island-based loan modification firm that, allegedly, has been the target of numerous complaints from homeowners claiming the company clipped them for thousands in upfront fees in exchange for failed promises of adjustments to the terms of their home loans to make their house payments affordable.

As part of the arrangement, the firm is accused of instructing the homeowners to cease making payments to, and ignore all communication from, their lender. White Plains, NY attorney Jeffrey Greene reportedly filed a $100 million class-action suit(1) against AMA last month and descibed the deal as, “It's like taking somebody's money and telling them to jump off a bridge.”

• [C]ourt papers and interviews with customers and former employees reveal a company that pulled out all the stops to bring customers in, but did little or nothing for them once it had their money. Phone calls went unanswered; untrained agents dissatisfied with paltry commissions resigned, leaving customers in the lurch; and homeowners received foreclosure notices despite guarantees that their homes would be saved.

• AMA claims to be the largest of a growing collection of mortgage modification firms that have sprouted up nationwide in the past two years as homeowners have battled to keep up with unaffordable subprime loans. The burgeoning industry has caught the eye of the FBI's New York office and the state attorney general's office, which are reviewing complaints.

• Former sales agents say working for AMA was a nightmare. They received no training or salary and relied on commissions of 15% to 25%. Many of the clients they brought in never had their loans modified by the firm's processors, with whom they were not allowed to speak. “We've had clients in for well over 150 days that aren't done,” says an agent who was hired off a Craigslist ad and worked at AMA for six months.

***

• Former employees say the company grew too fast, too soon and describe a frenetic, almost circus-like atmosphere in the office. They recall President Sal Pane riding around the office on a Segway scooter drinking Red Bull and exhorting agents to bring in customers.

• “Each time we'd turn in a file, we'd go out on the floor and hit a gigantic brass gong hanging from the ceiling,” says one former employee. “Everybody cheered one another, "yeah, yeah, yeah.'"

For the story, see No helping hand (Struggling families sue mortgage fixer AMA; paid but got nothing in return).

(1) Presumably, any evidence of possible wrongdoing coming out of this civil suit will come in handy for federal and state prosecutors (both in New York and in other states in which AMA operates) in deciding whether to bring their own cases (either civil or criminal) against the firm.

One More Arrested, Two Others Sought In San Diego-Area Alleged Land Patent, Foreclosure Rescue Scam; 17 Cheated Out Of $100K+, Say Prosecutors

In San Diego, California, the San Diego Union Tribune reports:

• Prosecutors are asking for the public's help in finding two people suspected of scamming homeowners in a foreclosure fraud scheme, officials announced Friday. Julita Whittingham and Edgardo Orcino are part of a group of people suspected of defrauding San Diego County homeowners out of more than $100,000 in 2007, prosecutors said.

***

• A third suspect, Jessica Refuerzo, 55, of Spring Valley, was found and taken into custody Friday, officials said. Prosecutors said the trio falsely promised to help homeowners who had defaulted on mortgage payments or who feared they would soon default by holding seminars in which they pitched their scheme.(1)

For more, see Authorities Seek 2 In Alleged Land Patent Scam.

For story update, see Man In Foreclosure Scam Pleads Not Guilty (Edgardo Orcino, 57, was arraigned after turning himself in at the downtown San Diego County Courthouse. Orcino, along with Larry Smith, Marguerita Gaviola, Maria Capa, Jessica Refuerzo and Julita Whittingham is charged in the alleged scheme. Whittingham remains at large, said Deputy District Attorney Marlene Coyne).

(1) Two other suspects in the case are in custody. Larry Smith, 60, has pleaded not guilty to felony charges of grand theft, conspiracy to commit grand theft and engaging in deceitful practices while acting as a mortgage foreclosure consultant. Prosecutors said Smith and the others sold “land patents” to homeowners facing foreclosure and told them that the patents would make them a sovereign nation that would be protected from the banks. At least 17 people fell for the scheme, prosecutors said, and lost tens of thousands of dollars.

Mortgage Servicers Feeling The Pain As Mounting Mortgage Delinquencies Drain Cash Reserves

Bloomberg News reports:

• Bank of America Corp., GMAC LLC, and WL Ross & Co. are among mortgage servicers that have endured billions of dollars in unexpected costs and added thousands of workers to handle rising foreclosures, denting a business once viewed as a safe haven from the housing market’s collapse.

***

• Servicers agree to advance cash to investors when borrowers are delinquent and get repaid when the loans are brought current or through foreclosure sales. [...] When late payments mount, servicers have to draw on their own reserves or credit lines until they conclude the loan won’t be repaid.

For more, see Mortgage Servicing Loses Luster as Bad Loans Mount.

Ohio Loan Officer Gets 20 Months For Role In Mortgage Scam Involving 365 Bogus Real Estate Closings, $13.3M+ In Illegally Pocketed Profits

In Dayton, Ohio, U.S. Attorney Gregory G. Lockhart (Southern District of Ohio) recently announced:

• Timothy Pearson, age 37, of Beavercreek, Ohio was sentenced to serve 20 months in federal prison, followed by three years of supervised release, and ordered to pay $171,211 in restitution to the Internal Revenue Service (IRS) for his role in a mortgage fraud scheme.(1) Pearson had previously been employed as a loan officer [...].

The press release reports that, according to court documents and testimony:

• Pearson directly and indirectly participated in at least 365 fraudulent real estate closings in the Greater Dayton area. Eight named and various unnamed co-conspirators fraudulently obtained in excess of $13.3 million for their collective personal use. Pearson personally derived $919,000 in gross receipts as part of this conspiracy.(2)

For the U.S. Attorney press release, see Local Mortgage Loan Officer Sentenced To Twenty Months For Mortgage Fraud.

(1) Pearson pleaded guilty to one count of conspiracy to commit money laundering and to two counts of income tax evasion, according to the press release.

(2) Reportedly, the scam involved basic, run-of-the mill, "Mortgage Fraud 101" maneuvers (ie. preparation and submission of fraudulent mortgage loan applications on behalf of prospective home buyers; fraudulently providing down payments for the homebuyers at the real estate closings ).

Court-Supervised Foreclosure Diversion Program Begins Monday In Allegheny County

In Pittsburgh, Pennsylvania, WTAE-TV Channel 4 reports:

• [B]eginning Monday, owner-occupied homes facing foreclosure will be specially flagged for attention, and the plaintiff will also have to identify the name, address and phone number of someone at the lender with authority to discuss the action.

***

• People will be put in touch with a nonprofit housing counselor free of charge to help try to work out arrangements with their mortgage company. The counselor will set up a conference under a judge's supervision to determine if they can work out an arrangement. [...] People entering the pilot project will get 90 day court stay of foreclosure while going through credit counseling and efforts to work out arrangements to save their home.

For the story, see Allegheny County Foreclosure Program Begins Monday.

Broome County Lawmakers To Address Mineral Rights Issue In Tax Foreclosures; Delinquent Homeowners Losing Natural Gas Rights When Curing Arrearages

In Broome County, New York, the Binghampton Press & Sun Bulletin reports:

• [Daniel D. Reynolds, the new chairman of the Broome County legislature] said he'll appoint a committee representing both parties in the next few days to look at Broome's practice of holding onto mineral rights to properties it obtains in tax foreclosure. The issue has been simmering for months, after three people retrieved titles to their properties after tax foreclosure proceedings but learned the county had taken away their rights to natural gas on their land.(1)

***

• The issue is important because oil and gas companies are paying large sums to obtain leases to mineral rights to properties on the Marcellus Shale formation, one of the largest deposits of natural gas in the United States.

For more, see Legislature chief targets mineral rights.

In a related post, see Upstate NY County Looks To Wrestle Away Mineral Rights From Tax-Delinquent Property Owner Who Has Since Paid Arrearage.

Go here for other posts on those looking to strip property owners of their mineral rights.

(1) According to the story, committee members will be appointed before the Jan. 27 meeting of the legislature, Reynolds said. The committee is expected to resolve the issue involving the three property owners before creating a new policy regarding who owns mineral rights after tax foreclosures. MineralRightsAlpha

Elderly, Penniless Mom Tells Judge To Jail Son For Home Equity Ripoff; Man Accused Of Abusing POA To Pocket Proceeds Of Reverse Mortgage On Residence

In Sarasota, Florida, the Sarasota Herald Tribune reports:

• An 82-year-old woman suffering from the mental and physical fallout of a stroke told a judge Thursday that her son should go to prison for stealing from her. About an hour later, her 61-year-old son was handcuffed, fingerprinted and sent away for two years.

• "Never in my life would I dream I would be in a position where my firstborn son hurt me," Barbara White said in a letter read aloud in court. "I am penniless and have had foreclosure suits filed against me."

• White's letter talked about the three years of suffering she has endured after finding out her son, Michael Garrett, took more than $80,000 from her. [...] A jury had convicted Garrett of using his power of attorney to give her a reverse mortgage on her home, then spend almost all the money on himself in 30 days.

For more, see Mother tells judge to imprison son (Michael Garrett was given a two-year prison sentence for stealing $80,000 from his mother).

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

Go here, here, here, here, here, and here for other posts on elder financial abuse. KappaDeedTheft FinancialAbuseOfElderlyAlpha

Saintfield Couple Cops Forgery Plea; Accused Of Ripping Off 94-Year Old, Blind Mother Of Her Half Of Residence; Civil Suit Expected To Undo Deed Theft

In Saintfield, Northern Ireland, the Belfast Telegraph reports:

• A man has pleaded guilty to a £100,000 fraud in which he and his wife left his blind 94-year-old mother without her home. Just moments after a jury was sworn in to hear the case George Ignatius Martin and his wife Mary Martin changed their plea and admitted forging land registry documents to transfer the elderly pensioner’s home into their name.(1)

***

• The fraud relates to a house at Downpatrick Street in Saintfield which the victim, Mrs Annie Martin, owned with her son George Ignatius Martin. [...] Mrs Annie Martin currently resides in a Belfast nursing home and civil proceedings are expected to be launched to have her share of the property signed back to her.

For more, see Son admits defrauding his mother of her home.

For additional Belfast Telegraph reports on this case, see:

• Family’s shame over son’s bid to swindle blind pensioner,
• Lawyer accused of cheating woman (94) out of her home.

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

(1) Reportedly, the Martins entered pleas to four charges of forgery and using false land registry documents with intent. Two charges of obtaining property by deception were not prosecuted, according to the story. KappaDeedTheft FinancialAbuseOfElderlyAlpha

Spokane Grandson, Girlfriend Jailed For Duping Grandma Into Signing Over Deed To Home; Then Filing Eviction Papers To Give Her The Boot

In Spokane, Washington, ABC News reports:

• At 83, Betty Halligan had lived a long and happy life, but after her husband died she needed extra care. Betty Halligan was suffering from dementia and diabetes, so her grandson Michael Halligan and his girlfriend Daphne Wood moved into her Spokane, Wash., home to help her out. Or so she thought.

• Betty Halligan's son, Dick Halligan, and his wife, Gail Halligan, lived in another state. At first they were happy that their mom had help, but later they became concerned when they learned she had signed over her power of attorney to their nephew. Dick Halligan was convinced his nephew was stealing from his mother.

***

• "They had convinced her to sign the deed to the house over to them, with the thought that they would stay and take care of her for the rest of life," Dick Halligan said. "As soon as the deed came in the mail, they started the paperwork to get an eviction notice to get her out of the house." With her life savings depleted and about to be evicted from her own home, Betty Halligan finally reached out to her daughter-in-law for help.

***

• Police raided the home and uncovered evidence that ultimately sent Michael Halligan and Wood to prison for more than two years. They were convicted of second-degree theft and forgery.

• Betty Halligan witnessed her grandson's trial and later moved to an assisted living center, where she lived until she passed away in June. "She was never the same after this," Gail Halligan said. "She died of disappointment and a broken heart."

For more, see Don't Give Power of Attorney to the Wrong Person (Will Power of Attorney Abuse Rise Because of Bad Economy?)

For ABC News video report, see Protect Against Thieving Relatives (Children and grandchildren are stealing from their senior citizen relatives).

Go here, here, here, here, here, and here for other posts on elder financial abuse. FinancialAbuseOfElderlyAlpha KappaDeedTheft

Foreclosed Elderly Cancer Patient, Wife Locked Out Of Home Without Eviction Hearing; Lender Denies Having Locks Changed

In Bronson, Michigan, WWMT-TV Channel 3 reports:

• An elderly couple that lost their home say that was bad enough, but now they've told Newschannel 3 that they have been locked out of their home and can't get their belongings, including medical equipment. Nobody seems to know why, and that's when [Henry and Ruthie Leaf] contacted [Newschannel 3] for help.

***

• Henry Leaf has the end of his life staring him in the face, so it's not the greatest time for the terminal cancer patient to be locked out of his home, but that's what he and his wife say happened. [...] Ruthie says that after being in and out of hospitals in late 2008, they finally came home in December to new locks, and all their stuff still inside. An attorney that has worked with them says the locks were changed in November.

• The company that foreclosed their home says it doesn't know who changed the locks. "I don't know what's going on to be honest," said Tom Maleski from Bond Corporation, "why the locks would be changed in November. If the locks were changed in November, nobody called me and told me that." Maleski also said no home-owner would be locked out until an eviction hearing. The Leaf's have their hearing on January 23rd.

***

• Branch County lists Northpointe Bank as the new owners of the home, but in a statement to Newschannel 3, Northpointe said they would have never ordered the locks to be changed. Meanwhile, the Leaf's tell us they never received any eviction or lock-out notification and are willing to let the house go, but they do want their stuff back.

For the story, see Locked out of their own home (read story) (watch video).

For story update, see A happy ending, after being locked out of their home.

Go here for other posts on improper foreclosure lock-outs and other lender screw ups. ForeclosureLockOuts

Foreclosure Not A Basis For Tenant Evictions In San Francisco

In California, a story in San Francisco Bay Guardian serves as a reminder that, within the city of San Francisco, it's illegal for a bank or broker or anyone else to evict a tenant just because the ownership of a building changed hands, including an ownership change due to foreclosure.

• [I]n an effort to promote tenant-rights awareness, the Assessor-Recorder's Office will be circulating letters to inform tenants when a landlord has received a 'Notice of Default' — the precursor to a foreclosure.

• "According to San Francisco law," the letter says, "it is illegal for the new owner to ask you to leave without just cause or shut off your utilities." Since most of the renters who have been evicted by this latest ruse don't speak English, the letter is being circulated in English, Spanish, and Chinese.

***

• The law may seem confusing, and in some cities, a foreclosure may mean the tenants have to go. But that's not the case in San Francisco. The city's rent ordinance requires "just cause" for eviction — and a change of ownership, no matter the cause, is not in itself a just cause.

• The San Francisco Rent Board's literature makes that clear: "The Court of Appeal held in Gross v. Superior Court (1985) ... that foreclosure, like any other sale, is not a just cause for eviction under the Rent Ordinance and provides no basis to force the tenant to leave."

For the story, see Don't leave your home (A foreclosure can be tough on tenants — but it shouldn't lead to eviction). SkimmingKappaRent

San Bernardino DA Investigators Bag Suspect Charged With Buying Home & Car, Obtaining Credit Cards Using Stolen I.D. Of 4-Year Old Who Died In 1984

From the San Bernardino County, California District Attorney's Office:

• Investigators from the District Attorney’s Specialized Prosecution Group foiled an attempted identity theft by Luis Gorson, 29, of Compton on January 2, 2009. Gorson obtained the identity of a deceased 4-yearold male who had died in 1984. He was attempting to obtain a certified copy of the decedent’s Birth Certificate from the San Bernardino County Recorder's Office.

• Staff from the Recorder’s Office became suspicious and notified investigators from the District Attorney's Specialized Prosecution Group. Gorson was arrested as he left the Recorder's Office after signing a Birth Certificate application form stating he was the deceased person. Gorson had purchased a residence in Compton, a vehicle and several credit cards using the decedent’s identity. Bail was set at $750,000.

Source: San Bernardino DA Investigators Foil ID Theft.

Property Manager Arrested On Suspicion Of Pocketing Rents Without Paying Bills, Leaving Properties Facing Foreclosure, Tenants Without Utilities

In Visalia, California, the Visalia Times Delta reports:

• The owner of Moreno Property Management in Visalia faces possible felony embezzlement charges. Sylvia Gonzalez, 25, of Visalia, is suspected of collecting rent money and utility payments for properties throughout Visalia and then not making the payments, detectives with the Visalia Police Department said.

• In some cases tenants in properties managed by her firm lived without electricity and gas, police said. Gonzalez is suspected of fraudulently obtaining bank accounts and forging paperwork to convince property owners that the bills were being paid. The crimes were discovered when some of the properties went into foreclosure, police said. She was arrested Thursday. The extent of the loss and the number of victims is being investigated.

Source: Owner of Moreno Property Management arrested for embezzlement. ThetaTenantRentSkimming

100s Of Iowa Tenants To Get The Boot As Buildings In Foreclosure, Maintenance & Utility Bills Financially Choke Landlord; Consequences Concern Cops

In Sioux City, Iowa, KCAU-TV Channel 9 reports:

• Hundreds of renters in Sioux City are being told to move because of financial and legal problems facing their landlord. The landlord, KJM Incorporated, also known as Meyer Company, is being taken to court for nearly $1 million in unpaid mortgages.

• Tenants [...] were told on Wednesday they would need to move out by February 7th. The notice says because of unresolved maintenance issues and high utility bills the company can't afford pay, all tenants must relocate.

***

• "It's disgusting," said [one tenant]. "[There are] cockroaches everywhere. The floors, the walls are caving in. The ceiling, the only thing holding my ceiling up is a piece of plywood. It's unhealthy especially when you have asthma and a brand new baby on the way."

For more, see Hundreds Forced To Move As Landlord Taken To Court.

In a related story, see Police, Renters Wonder What Will Happen Next:

• [K]JM Incorporated and owner Duane Meyer are closing dozens of buildings in Sioux City after he says high utility and maintenance costs got the best of him. Now tenants are wondering what to do, while police are concerned about how they will monitor so many vacant buildings. [...] Captain Melvin Williams with the Sioux City Police Department says having so many buildings become vacant at once will be a major concern.

For story update (1-28-09), see Some Tenants Now Told They Can Stay.

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

Unpaid Bills At 60 Unit Building In Foreclosure Leave Tenants Dealing With Accumulated Trash, Periodic Water Shutoffs

In Alton, Illinois, The Telegraph reports:

• Sanitation workers Monday cleared away more than a month's worth of garbage that overflowed large trash receptacles at Belle Manor apartments and disgusted its tenants. "It's a mess out here; it is ridiculous," said one of two tenants who called The Telegraph in recent days to complain about the mountains of smelly trash. "It's horrible. I've been here three years, and it has never been like this." [...] She claimed no one had picked up garbage at the privately owned complex of 60 units since "right after Thanksgiving.

***

• In what could be related to the problem, records at the Madison County Courthouse show the 60-unit complex [...] is in foreclosure.

***

• The lack of trash pick-up is only the latest of Belle Manor's tenant woes. In September 2007 and July 2008, tenants suddenly lost water service with no warning. The first time, the water was off for more than seven hours. [...] Tenants' faucets then unexpectedly went dry 10 months later on July 17, when the complex's owner failed to make a timely payment on a $7,120 city sewer bill. One of the tenants said that shut-off, in 90-degree-plus heat for about 26 hours, was the fourth such time in the three years she had lived at Belle Manor.

For more, see Taking out the trash (Piled-up garbage removed from Belle Manor). ThetaTenantRentSkimming

Theft & Burglary Stories Connected To Foreclosures, Vacant Homes

Theft & burglary stories with some connection to foreclosures and vacant homes:

• Brackenridge, Pennsylvania: A Brackenridge homeowner who recently moved out of her residence went back to check on the mail when she made a discovery that would end up putting the whole block on alert. She noticed a strong odor of natural gas, saw the back door was kicked in, and noticed there was approximately a 3-foot section of copper pipe missing causing the natural gas to escape throughout the house. The fire department responded and cleared the area and evacuated the citizens in the local area until all the utilities were shut off, out of concern that an explosion could be triggered. See Copper Theft Led To Brackenridge Gas Leak.

• Deland, Florida: Police are looking to crack down on thieves targeting empty homes for copper. A foreclosed home in DeLand was targeted by thieves last week. Thieves stole almost the entire air conditioning unit, cutting off copper tubing. Law enforcement said it's happening across the county. Criminals are looking for homes with for sale or foreclosure signs. See Copper Theft Creeping In Volusia County.

• Elk River, Minnesota: Elk River foreclosed and model homes have been experiencing a rash of break-ins. Elk River Police Department Capt. Bob Kluntz said over the weekend of Dec. 27 and Dec. 28, a number of homes were broken into just south ofthe Elk River Country Club. The common factor is emptiness, meaning all the homes were vacated at the time. Either the residence was one under foreclosure, or a model home for sale. See Police see rash of home break-ins.

• Phoenix, Arizona: Phoenix-area police are seeing a rise in the theft of pool equipment and supplies from Phoenix-area residences. It is one of a number of property crimes occurring in the region, encouraged by the fact that a substantial number of local homes are vacant because of foreclosure and the inability to find buyers or renters in the soft housing market and economy. The Tempe Police Department said [...] there were 80 pool equipment thefts in the metro area between April and December, putting the issue on the radar of local police units. See Pool equipment thefts on the rise.

• Moriah, New York: The former treasurer of the Moriah Ambulance Squad has confessed to stealing $9,600 from the squad’s treasury to pay a mortgage. She said she took the money between March and May 2008 to send to her attorney for a mortgage-foreclosure action. She also made false entries in the Ambulance Squad’s check register to show that three checks were made out to vendors instead of to her. See Ambulance treasurer pleads guilty. copper metal theft yak

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