Central Florida Mandatory Mediation Order Affecting Owner-Occupant Home Foreclosures Excludes Osceola County

In Osceola County, Florida, the Orlando Sentinel reports:

• Homeowners facing foreclosure in Osceola County may be shut out of a process that could have provided some relief to them, because the judge who oversees their cases opposes it.

***

• Late last month, 9th Judicial Circuit Chief Judge Belvin Perry, who oversees state courts in Osceola and Orange counties, issued an administrative order that makes mediation mandatory in foreclosure cases. [...] But the order doesn't apply to Osceola, where almost one of every 10 homes is going back to the lender, because administrative Judge R. James Stroker, who oversees Osceola, made the case against it. He wrote a letter to Perry objecting to mandatory mediation but refused to turn the letter over to the Sentinel.

For more, see Foreclosure mediation unnecessary, Osceola judge says.

Elderly South Florida Couple Held Hostage By Broken Elevator; Condominium Association's Lack OF Funds May Be The Problem

In Hollywood, Florida, WTVJ-TV Channel 4 reports:

• An elderly couple living in the Southbrook Condominiums in Hollywood said they're being held hostage in their third story home because a broken elevator has gone two months without fixing. Olga Marino and her 90-year-old husband both require wheelchairs in order to get around and said they're forced to take the stairs, which is a safety hazard.

• “We don’t have the proper gear to take a person in her condition two flights of stairs down,” Luis Marino, the couple’s son, said. The Marino's said they pay a monthly maintenance fee of nearly $300, including their mortgage but have seen no action in trying to repair the elevator.

***

• The county declared the elevator a danger in a March 4th notice to residents, which could cost as much as $20,000 to fix. “Supposedly they [the condominium association] don’t have this money,” Luis Marino said.

For more, see S. Fla. Elderly Couple Outraged Over Broken Condo Elevator.

South Florida Homeowner Facing Foreclosure Out $7,000 After Hiring Firm In Failed Loan Modification Attempt

In Lehigh Acres, Florida, The News Press reports:

• Yolande Tanelus was in danger of losing her home and after paying nearly $7,000 to a foreclosure rescue company, she's in even worse financial trouble. Tanelus worked two jobs to pay the $2,872 mortgage on her home in Pompano Beach. But at age 51, she could no longer keep up the pace of a 16-hour workday, so she quit one of the jobs. That's when she fell behind in her payments to Countrywide Home Loans.

• Tanelus, who now lives in Lehigh Acres, turned to Outreach Housing LLC, a Fort Lauderdale company billed as a "grass roots organization helping homeowners fend off aggressive mortgage lenders and defend themselves against erroneous lender practices." By contacting Outreach, Tanelus had gone from the frying pan into the fire.

For more, see Mortgage 'rescuer' lets owner drown.

Go here for other posts on Outreach Housing.

Default On $131M Note Throws Apartment Buildings In Three States Into Foreclosure; Tenants Face Threats Of Utility Shutoffs, Sewage Seepage

In Portsmouth, Virginia, The Virginian Pilot reports:

• The management of two large Churchland-area apartment complexes has not paid utility bills recently and appears to have abandoned them - prompting a court to appoint a receiver for the properties. The complexes are the 196-unit Chelsea Point, formerly called The Villas, in Portsmouth, and the 208-unit Vacaro Apartments, formerly known as the Woodhaven Apartments, in Chesapeake.

***

• Owners S.E. Portfolio Apartments LLC, which is based in Irvine, Calif.; and GTS Property Portfolios B-2 LLC, which has a Midlothian registered office, got a loan on the properties in 2007, the document said. The complexes are among 11 in three states that are security on a nearly $131 million note, it said. It said Bethany Management Group LLC,(1) a related entity, was believed to have "effectively abandoned management" of the sites.

• [One tenant] said she has lived there for a year and that maintenance became worse. Last weekend, she said, the plumbing backed up in her building and flooded the hallway and laundry room.

For more, see Receiver named for Portsmouth apartment complexes.

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

(1) Go here for other posts on Bethany Group buildings in foreclosure in Georgia and Arizona. RentSigmaSkimming

Bank Illegally Ransacks Home & Changes Locks, Says Homeowner In $150K+ Lawsuit

In Central Oregon, KATU-TV reports:

• Tammy Glenn’s central Oregon home on Pine Hollow reservoir has always brought her peace and happiness. The small A-frame home is right on the water, and it’s been a relaxing break from the everyday grind of running her hardware business – until now. “My whole sense of security has been rattled to say the least,” Glenn told KATU News. Rattled, Glenn says, because her mortgage company entered her home three times, ransacked everything, and changed her locks – all without her knowledge.

***

• The reason Chase Bank gave her? They thought the home was vacant and abandoned. Glenn says that not even close to the actual situation. [...] Now, she's suing Chase Mortgage for more than $150,000.(1)

For more, see Bank's mistake shatters woman's security.

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

(1) In a another case, a homeowner scored over $1M in a similar sounding case against another lender. See Nevada High Court OKs Damage Award To Homeowner Due To Mortgage Company Misidentification Of Home In Foreclosure. ForeclosureLockOuts

Illinois AG Tags Unlicensed Contractor With Civil Suit; Firm Accused Of Pocketing Money, Failing To Satisfactorily Perform Work

Frrom the Illinois Attorney General's Office:

• Attorney General Lisa Madigan [...] filed a lawsuit in Ford County Circuit Court alleging that a Gibson City, Ill., contractor solicited roofing contracts without a license and collected up to $18,090 in fees for work that he failed to perform or completed in a substandard manner.(1) Madigan’s suit alleges that Bryan Brandon, B.F. Roofing and Brandon Finishing entered into contracts for roofing and remodeling services, accepted consumers’ down payments and then either failed to perform the work or conducted the work in a substandard manner. The Attorney General’s Consumer Fraud Bureau has received seven complaints about Brandon’s work from consumers in Champaign, Clinton, DeWitt, Ford, McLean and Vermillion Counties.

For more, see Madigan Sues Ford County Roofer For Failure To Fulfill Home Improvement Contracts.

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 press release, Madigan’s lawsuit alleges that Brandon violated the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois Home Repair and Remodeling Act by performing work in a shoddy, unprofessional manner; failing to complete the repair work; and refusing to provide refunds to consumers. The complaint also alleges that Brandon failed to provide homeowners with written contracts and the “Home Repair: Know Your Consumer Rights” pamphlet, as required under Illinois law. StiffingContractorsTheta

Watch Out For Junk Mail Simulating Official Government Documents Peddling Property Tax Reduction Scams

The Office of California Attorney General Edmund Brown has issued the following consumer alert:

• Companies using official-sounding names like "Tax Review," "Tax Adjusters" and "Tax Reassessment" seek to scam homeowners who are worried about their property taxes and declining property values. They send misleading mailers that look like official government agency documents to trick you into sending them money to try to lower your property taxes. They also use addresses like "Regional Processing Center" to make you think the mail is coming from a government agency. Sometimes, they threaten to impose a late fee if you don’t send them money by a certain date. Don’t be fooled. Government agencies don’t charge for tax reassessment—it’s free.

For the rest of the alert, see Property Tax Reduction Scams.

Mortgage Servicing Industry Reform Needed In Effort To Address Foreclosure Crisis

Ms. Margot Saunders, Counsel, for the National Consumer Law Center testified Wednesday before the House Financial Services Committee Subcommittee on Financial Institutions and Consumer Credit calling for reform in the mortgage finance industry.(1)

Included among the industry players that "need reforming" are those in the mortgage servicing industry, on whom Ms. Saunders offers this observation:

• Mortgage servicers are the link between mortgage borrowers and the mortgage owners. [...] Despite the important functions of mortgage servicers, borrowers have few market mechanisms to employ to ensure that their needs are met. Rather, in the interest of maximizing profits, servicers have engaged in a laundry list of bad behaviors, which has considerably exacerbated foreclosure rates. The most common abuses in loan servicing include misapplication of payments, use of suspense accounts, failure to make timely escrow disbursements, and cascading fees imposed upon homeowners in default. These abuses exist because there are market incentives rather than deterrents for this type of behavior. Any new regulation of the mortgage marketplace must account for these dynamics and move beyond them.

Go here for Ms. Saunders' entire prepared testimony to Congress (Her views on the reform of the mortgage servicing industry are found on pp. 11-13).

Go here, go here, go here, and go here for posts on questionable mortgage servicing practices.

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

(1) The title of the hearing was Mortgage Lending Reform: A Comprehensive Review of the American Mortgage System. Click Here To View Archived Webcast. QuestionableServicingTacticsSigma

Feds Turn Up Heat On Home Loan Scams

The New York Times reports:

• Spurred by rising public anger, federal and state investigators are preparing for a surge of prosecutions of financial fraud. Across the country, attorneys general have already begun indicting dozens of loan processors, mortgage brokers and bank officers. Last week alone, there were guilty pleas in Minnesota, Delaware, North Carolina and Connecticut and sentences in Florida and Vermont — all stemming from home loan scams.

For more, see Financial Fraud Is Focus of Attack by Prosecutors.

Maryland Feds Score Another Mortgage Fraud Guilty Plea, Snag Suspect In Another Alleged Scam

From the Office of the U.S. Attorney in Maryland:

Bethesda Womam Pleads Guilty In Mortgage Fraud Scheme (Recruited Straw Purchasers and Prepared False Documents to Buy Properties, Resulting in Over $2.5 Million in Losses to 10 Individuals and Banks):

• Kara McIntosh, age 46, of Bethesda, Maryland, pleaded guilty [last week] to mail fraud arising from the fraudulent purchase of properties in Maryland and the District of Columbia using false mortgage documents, announced United States Attorney for the District of Maryland Rod J. Rosenstein.(1)

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

Fort Washington Man Charged In Mortgage Fraud Scheme (Case Investigated by the Maryland Mortgage Fraud Task Force):

• Robert Dewain Venson, age 38, of Fort Washington, Maryland was arrested [last week] for mail and wire fraud, money laundering and failing to file tax returns in connection with a three year mortgage fraud scheme involving 13 residential properties, announced United States Attorney for the District of Maryland Rod J. Rosenstein.(2)

(1) The "cash back" straw buyer mortgage scheme involved fraudulent loans worth over $19,021,366. Over 10 individuals and banks were harmed. The loss amount foreseeable to McIntosh is between $2.5 and $7 million. Many of the purchased properties have been foreclosed upon. Among the bad acts were the pocketing of money designated on the closing statement as “renovations” that her company purportedly performed. No such renovations ever occurred.

(2) Rather than purchase the properties in his own name, Venson allegedly paid straw buyers to appear at the settlement posing as the buyer. Venson typically would represent to the straw buyer that he would pay the loan obligation and allegedly inflated the price listed on the sales documents to an amount substantially larger than the actual price, causing the mortgage lender to provide funds for the purchase substantially in excess of the actual price, pocketing the difference.

State AG Files Civil Suits Against Two South Jersey Loan Modification Firms Promoting "Hope" - Won't Rule Out Future Criminal Action

In Trenton, New Jersey, KYW Radio 1060 (Philadelphia) reports:

• New Jersey officials have filed three separate lawsuits, two in Camden County Superior Court, alleging mortgage fraud on a large scale. The actions were announced Wednesday in Trenton during a midday press conference by Attorney General Anne Milgram, who says she decided to take the civil route in attempts to shut the operations down quickly. But she won’t rule out later criminal prosecution against any of the 11 people (four from South Jersey) named in the civil actions.

• In the two Camden County cases, it is alleged that "Hope Now Financial Services" of Cherry Hill and "New Hope Modifications" of Bellmawr attempted to align themselves with a national nonprofit effort that helps low-income people stay in their homes and avoid foreclosure. The two Camden County firms, in fact, have no connection with the Hope Now Alliance, a counseling service created in conjunction with the federal government.

• What the firms did, according to Milgram, is scam more than 100 people from as far away as Texas. Milgram told reporters, “These businesses collected substantial upfront fees from distressed mortgage holders for loan modification services, but did nothing to actually help.” The upfront fees were as much as $3,000 from each individual, many of whom lost their homes to foreclosure and suffered perhaps irreparable harm to the credit ratings, according to officials. Two principals named in the New Hope suit -- Donna Fisher and Brian Mammoccio -- reside in Mullica Hill (Gloucester County), NJ.

For the story, see Officials Say Finance Groups Preyed on NJ Homeowners.

For more from the New Jersey Attorney General's Office, see:

• NJ AG press release: Attorney General Announces Three New Mortgage Fraud Complaints - Disbarred Lawyer, Son Sued for Racketeering; Loan Modification Businesses Charged,
• Lawsuit: Milgram v. New Hope Property LLC d/b/a New Hope Modifications,
• Lawsuit: Milgram v. Hope Now Financial Services.

City Of Oakland Files Five Lawsuits Accusing Lenders, Agents Of Illegal Foreclosure Evictions

In Oakland, California, KGO-TV Channel 7 reports:

• Oakland City Attorney John Russo said [Thursday] that his office has recently filed five lawsuits against major banks and local agents he alleges are illegally evicting tenants. At a news conference at City Hall, Russo alleged that despite repeated warnings, banks and their agents have continued to violate Oakland's "just cause" law by sending illegal eviction notices to good tenants in foreclosed buildings.

***

• Russo said the lawsuits name as defendants banking giants JPMorgan Chase and Fidelity National Financial, along with their subsidiary companies and local agents, whom he alleges are paid to remove tenants from properties the banks have acquired through foreclosure.

For more, see Banks accused of violating renters' rights.

For more from the Oakland City Attorney's Office, see:

• Press Release: Oakland City Attorney sues major banks, local agents to stop illegal evictions and abuse of tenants’ rights;
• Lawsuit against: JPMorgan Chase, Chase Home Finance, EMC, etc.,
• Lawsuit against: Fidelity National Financial, etc.,
• Lawsuit against: Keller Williams, etc.,
• Lawsuit against: Session Real Estate,
• Lawsuit against: Smart Choice Realty, etc.
• Examples of Wrongful Eviction Notices,
• City Attorney's Guideline for Tenants' Rights in Foreclosed Housing.

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

Texas AG Announces Final Distribution Of Restitution From Loan Modification Company; Firm Takes Total Hit Of $750K

From the Office of Texas Attorney General Greg Abbott:

• Texas Attorney General Greg Abbott [yesterday] announced the conclusion of the state’s enforcement action against Foreclosure Assistance Solutions (FAS). As a result of an agreement, the Florida-based company must no longer engage in the foreclosure mitigation business in Texas and has paid more than $390,000 in restitution to 351 Texas homeowners. FAS is the eighth foreclosure rescue operation shut down by Attorney General Abbott.

***

• Homeowners who contacted Foreclosure Assistance Solutions were pressured to immediately pay a $1,200 fee and enter into a contract. The contract prohibited homeowners from contacting their mortgage lenders – yet communicating with lenders is critical when homeowners are facing financial difficulties. After paying the $1,200 fee, homeowners were largely ignored, and many of their homes were foreclosured [sic].

• Today’s settlement also prohibits the company from conducting Texas-based mortgage foreclosure mitigation in the future and requires that the defendants pay a total of $750,000, including $475,000 in restitution, $100,000 in civil penalties and $175,000 in attorneys’ fees.

For the Texas AG's press release, see Texas Attorney General's Enforcement Action Provides Restitution To Texas Homeowners (Foreclosure Assistance Solutions Inc. repays 351 Texas homeowners more than $390,000).

For relevant court documents on this case, see:

• Court order distriubting remaining restitution from Foreclosure Assistance Solutions,
• Agreed final judgment and permanent injunction - Foreclosure Assistance Solutions, et al.,
• Original Texas AG's lawsuit (9/2007) - State of Texas vs. Foreclosure Assistance Solutions, et al. (lawsuit alleged violations of the Texas Deceptive Trade Practices Act).

San Antonio Feds Set Up Hotline To Field Mortgage, Loan Modification, Foreclosure Rescue Scam Complaints From Area Homeowners

In San Antonio, Texas, WOAI-TV Channel 4 reports:

• A growing number of homeowners are becoming the targets of mortgage-fraud schemes, and some may not even know it until it's too late. Right now, homeowners across San Antonio are falling victim to mortgage-fraud schemes. The FBI says its new hotline could help curb the corruption.

***

• "The hotline is basically our attempt to become a little more proactive than reactive in addressing mortgage fraud here in San Antonio," Special Agent Jenson told News 4 WOAI. The F.B.I. says it is important to track mortgage-fraud crimes early on in the process. Anyone who is aware of a possible case of mortgage fraud should call 210-650-6777.

For more, see F.B.I. targets mortgage fraud with new hotline.

Florida Cities Can Force Condominium, Apartment Complexes To Hire Security, Says State AG

The South Florida Sun Sentinel reports:

• Is your condominium association ready to fight crime?More importantly, can it afford to hire at least one professional security guard? It soon could have no choice. Florida Attorney General Bill McCollum ruled last month that cities in this state have the authority to force condo associations and apartment complexes to hire security guards. His opinion came in response to questions from Sunny Isles Beach in Miami-Dade County, where police several months ago began calling for more help patrolling condo communities. A workshop showed a rash of petty crimes and car burglaries were taking place.

For more, see Cities can require condo associations to hire security guards.

For the Florida AG's advisory legal opinion, see AGO 2009-08: Municipalities, security services for condominiums.

Oregon Lawmakers To Consider Legalizing The Shift Of The Financial Loss Of Home Equity Thefts Through Use Of Fraudulent POAs Onto The Victim

A 2007 story in California's Contra Costa Times on the California Power of Attorney Act and the ripoff of the elderly using powers of attorney begins as follows:

• AN OAKLAND WOMAN steals $200,000 from her sick 73-year-old mother's bank account. She blows most of it at Cache Creek Casino. Her life savings gone, the senior now has to get by on Social Security.

• An East Palo Alto woman is accused of taking out a $200,000 loan on her disabled 92-year-old grandmother's house without her permission. According to San Mateo County prosecutors, she buys herself a champagne-colored Hummer and leaves her disabled grandmother alone for days in a house full of rats.

• A Stockton woman is hired to take care of a 92-year-old former elementary school principal. She steals more than $100,000 from the elderly woman, spending $12,000 on five decorative gates for her own home.

• All of these cases have one thing in common: The weapon used to commit the crime, or alleged crime, was a perfectly legal document called a power of attorney.

As I mentioned in one of yesterday's posts, a hearing in the Oregon House Judiciary Committee is scheduled for tomorrow in which advocates for the banking industry will be attempting to push through a proposed bill, based on a model uniform act (Uniform Power of Attorney Act) that, from the standpoint of the victim, could very well lead to the legalizing of the use of this weapon when committing these types of crimes in Oregon.

The proposed law reads in a way whereby victims whose houses are sold or encumbered by fraudulent mortgages using a forged power of attorney will NOT be able to void the transaction unless they can prove that the individual handling the transaction had actual knowledge that the POA was forged.

As if it wasn't already difficult for a victim of this type of crime to file a civil lawsuit to undo the effects on their property title of a home equity theft, the propsed law, if passed, will essentially assure the homeowner-victim that recovering his/her home equity by voiding the illegal transaction through civil litigation will be an impossibility. The victimized homeowner may still recover the home, but will be stuck having to pay off the fraudulently obtained mortgage placed on the property by the scammer. While the victim may be entitled to criminal restitution, recovery of the home equity value in this way depends on:

1. prosecutors filing a criminal action against the alleged scammer (not always the case),
2. prosecutors obtaining a guilty conviction (not always the case) in which restitution is awarded, and
3. the now-convicted scammer having the funds to pay the restitution (generally not the case).

Those of you with any interest in curbing the horror stories involving the fraudulent use of powers of attorneys to victimized unwitting homeowners are encouraged to contact the Oregon House Judiciary Committee and tell them how you feel (Jennifer Ranstrom-Smith, Committee Assistant, 503-986-1513 Jennifer.RanstromSmith@state.or.us).

In closing, keep in mind that the proposed bill, while only affecting Oregon, is based on a model uniform act, the Uniform Power of Attorney Act. A successful attempt to sneak this legislation through the Oregon legislature by the banking industry will only encourage industry advocates to do the same in other states.

For the 2007 story in the Contra Costa Times, see Theft of Elder Nation: An editorial series: State needs to revoke "theft license".

This bill to be considered tomorrow by Oregon lawmakers is HB2537; you can obtain a copy via this link.

For yesterday's post, see Banking Industry Advocates Pushing Proposed Bill That Could Encourage More Home Equity Thefts Thru Forged POAs.

Go here for posts on the use of powers of attorney to ripoff the elderly of their home equity.

Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc. DeedGammaTheft FinancialAbuseOfElderlyAlpha

Nevada AG Files Felony Theft Charges Against Owner Of Vegas Loan Modification Firm

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:

• Jack Ferm was arrested on felony charges Wednesday morning after a hearing in District Court. He is the head of mortgage rescue company, the U.S. Justice Foundation, which was ordered to close last week. Instead of a slap on the wrist, Foundation President Jack Ferm left district court in handcuffs. The man whose company filed hundreds of unsuccessful lawsuits to stop foreclosures now faces felony criminal charges.

***

• According to the complaint, Ferm promised he could stop foreclosure by helping homeowners sue their mortgage companies themselves. Instead, at least two victims claim they paid thousands for services Ferm never provided.

• "Attorney General Masto is aggressively pursuing any fraud related to the mortgage industry. The current wave of scams happens to be the loan modification scams, and again, this was one of the companies we've received the most complaints about," said Chief Deputy Attorney General John Kelleher.

• In previous interviews, Ferm insisted his foundation filed as many as 800 lawsuits using boilerplate legal documents prepared by paralegals.

According to the story, Ferm, a non-attorney, was arrested while in court on a different matter related to his loan modification activities. Specifically, he was responding to an order to show cause in connection with allegations of unauthorized practice of law.

For more, see U.S. Justice Foundation's President Arrested.

See also Nevada Attorney General press release: AG Announces Former Las Vegas Radio Talk Show Host Arrested In Mortgage Rescue Fraud Scheme:

• Nevada Attorney General Catherine Cortez Masto announced today that Jack Ferm, a former talk show host in Las Vegas, Nevada, has been arrested on two counts of felony theft and related charges in connection with the operation of U.S. Justice Foundation, a mortgage rescue scam.

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

Nevada State Bar Accuses Loan Modification Firm Of Unlicensed Practice Of Law As Hundreds Of Their Lawsuits Move Thru State, Federal Courts

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:

• First it was a federal judge, and now the State Bar of Nevada is taking action against a local mortgage rescue company. The bar seeks to stop the U.S. Justice Foundation and its president from practicing law without a license.

• The Foundation claimed it could stop foreclosures by helping people to sue their mortgage companies themselves. Trouble is, in the vast majority of cases, it didn't work. Now the Foundation, and its president Jack Ferm, have to answer for the hundreds of lawsuits moving through both the state and federal courts.

***

• The bar seeks a court order to stop Ferm and the Foundation from continuing to engage in the unauthorized practice of law. Ferm says that's unnecessary because he has already closed his doors.

For more, see I-Team: More Legal Trouble for U.S. Justice Foundation.

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

NJ AG Files Civil RICO Charges Against Alleged Flippers; Accused Of Using Unwitting Investors To Pocket Big Profits, Leaving Them Holding The Bag

In Northern New Jersey, WABC-TV Channel 7 reports:

• There are major developments in an Eyewitness News investigation. The New Jersey Attorney General's office is filing civil RICO (racketeering) charges against a disbarred lawyer and his son, accusing them in a widespread investment scheme.

***

• The defendants, Seth and Marty Gendel, ran a property management firm in Totowa, New Jersey. They are accused by the Attorney General's office of orchestrating a pattern of racketeering that included making false promises to investors, submitting fraudulent mortgage applications and failing to make mortgage payments, resulting in ruined credit.

***

• In the complaint, the Attorney General's office alleges the Gendels, mortgage brokers and others conspired in a pattern of racketeering to solicit investors to buy properties in distressed neighborhoods at grossly inflated prices to generate unwarranted profits for themselves. [...] The investors say the Gendels promised to manage the homes and pay the mortgages, but then came the foreclosure notices and destroyed credit.

***

• The AG's office claims many homes in the Gendel scheme have been condemned, left vacant or abandoned. [...] Sources say that there is also an ongoing criminal investigation into the Gendels and others.

For more, see Racketeering scheme in New Jersey.

For more from the New Jersey Attorney General's Office, see:

• Lawsuit: Milgram v. Casey Properties, LLC, et al.,
• Press Release: Attorney General Announces Three New Mortgage Fraud Complaints (Disbarred Lawyer, Son Sued for Racketeering; Loan Modification Businesses Charged).

The ten defendants in this case are: Casey Properties, LLC; Seth L. Gendel; Martin A. Gendel; Lee Alan LLP; Francis T. Memmo; Kelly Kotzker; Damien Figueroa; Edward Evans; Nicholas Manzi; and Robert B. "Barry" McBriar.

Homeowner Paying Cash For New Home Faces Threat Of Foreclosure As Builder Accused Of Stiffing Contractors

In Phoenix, Arizona, KPHO-TV Channel 5 reports:

• Some Valley homeowners are facing foreclosure even though they've paid their mortgages in full, thanks to a lien placed on the property by a contractor. Retired homeowner Danny Riggs paid cash for his home, but builder Brown Family Communities failed to pay the contractors who installed the windows, plumbing, drywall and air conditioning as well as the construction crew, he said. Contractors hit Riggs with a mechanic's lien, which gives a homeowner six months to settle a debt -- even if the homeowner was not the one who hired the contractor. Otherwise, the home goes into foreclosure.

For more, see Liens Send Homes To Foreclosure.

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. StiffingContractorsTheta

Analysis Of Recently Enacted California Foreclosure Prevention Act

An article on mondaq.com provides a legal analysis of the California Foreclosure Prevention Act (the "Act"), which was enacted by the state Legislature, and signed by Governor Arnold Schwarzenegger on February 20, 2009.

• The bill (ABX2 7) was established as Chapter 5 of the 2009-2010 statutes. The Act resulted from Governor Schwarzenegger's legislative proposal to stem foreclosures in California by incentivizing servicers to offer "comprehensive loan modification programs."

For more, see California´s New Law Trading Foreclosure Moratorium For Mortgage Modification.

200+ South Florida Property Owners Accused Of Screwing City, County Out Of $22M In Unpaid Property Taxes With Bogus Homestead Claims

In Sunrise, Florida, WFOR-TV Channel 4 reports:

• The City of Sunrise and the Broward Property Appraiser's office have joined forces in a crackdown on people illegally claiming homestead exemptions for their properties. And now some 237 homeowners will be receiving bills that total nearly $22 million.

For more, see Sunrise Cracks Down On Homestead Exemption Fraud (Sunrise Will Bill Homeowners Nearly $22 Million For Lost Revenue; More Than 230 Homeowners Caught In Crackdown).

Broken Sewer Pipe In Aparment Complex In Foreclosure Making Life Uncomfortable For Tenants; Landlord Unavailable For Comment

In Mesa, Arizona, KPHO-TV Channel 5 reports:

• “We’re dealing with poop. Sorry to say that, but we’re dealing with poop,” said Mike McWilliams. The Mesa man is talking about a problem that’s been plaguing his apartment complex for two months. [...] Since January, raw sewage has spilled out of a pipe next to his apartment. “I can’t stand the smell,” he said. “With the wind blowing, I get drifts of it. We can’t sleep with the windows open because of the fact that it drifts into the house.”

***

• So far, McWilliams has had no luck getting the problem with the pipe fixed. The owner of the property went into foreclosure last month. County officials say they have had trouble tracking him down.

For more, see Tenants Fume As Raw Sewage Seeps. SkimmingKappaRent

Mandatory Mediation Available On Request For Indianapolis-Area Homeowners Facing Foreclosure

In Indianapolis, Indiana, The Indianapolis Star reports:

• Marion Superior Court has passed a new local rule that allows homeowners facing foreclosure in civil court the option of settlement conferences, or mediation, with their financial lenders. The conferences are mandatory for lenders if the borrower responds to a notice from the court. The borrower must reside in the house facing foreclosure. Local housing experts estimate that one in 220 Marion County homes is in some state of foreclosure.

Source: Foreclosure mediation OK'd.

Free Legal Advice Hotline For Birmingham-Area Homeowners Facing Foreclosure

In Birmingham, Alabama, The Birmingham News reports:

• Homeowners facing foreclosure in the Birmingham area can get free legal advice starting today under a hot line set up by the Alabama State Bar and Legal Services Alabama. The toll-free hot line (1-877-393-2333) will connect homeowners to a legal aid lawyer.

***

• Legal Services Alabama is a nonprofit organization that provides free legal help on civil-court matters to low-income people. The legal advice and aid campaign already is under way in Huntsville, Montgomery and Mobile. The participating lawyers are being paid under a grant by the Alabama Civil Justice Foundation and the Access to Justice Commission.

For more, see State bar connecting homeowners, lawyers.

California Caretaker Charged With Draining Equity From 84-Year Old Woman's Home, Leaving Her Underwater & Facing Foreclosure

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

• The live-in caretaker of an 84-year-old Huntington Beach woman allegedly took out fraudulent loans in her name, bilking the older woman out of about $200,000 and putting the woman's home in danger of foreclosure, authorities said Tuesday. Cindi Dee Powell, 54, has been charged with financial elder abuse, grand theft, identity theft, vehicle theft, fraud and forgery. She remains in custody.

• According to police, Powell moved in with Constance Wakefield about two years ago to help the woman, who uses a wheelchair, around the house and drive her to appointments. Wakefield hired Powell through a classified ad and was not aware that Powell was on probation in another elder abuse case.

For more, see Live-in caretaker charged with financial elder abuse, fraud and forgery (Police say Cindi Dee Powell bilked an 84-year-old Huntington Beach woman out of about $200,000 and put the woman's house at risk of foreclosure).

Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc.

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

Banking Industry Advocates Pushing Proposed Bill That Could Encourage More Home Equity Thefts Thru Forged POAs

A hearing in the Oregon House Judiciary Committee is scheduled for this Friday, March 13 in which advocates for the banking industry might be quietly attempting to get away with a fast one by forcing through a proposed bill, based on a model uniform act (Uniform Power of Attorney Act), that could lead to an increase in home equity heists in connection with the use (and abuse) of powers of attorney.

Based on how the proposed law reads, it appears to me that victims whose houses are sold or encumbered by fraudulent mortgages using a forged power of attorney will NOT be able to void the transaction unless they can prove that the individual handling the transaction had actual knowledge that the POA was forged.

The relevant provision in the bill, buried in Section 19(3), follows:

• (3) A person that in good faith accepts a power of attorney without actual knowledge that the signature is not genuine, that the power of attorney is void, invalid or terminated, that the purported agent's authority is void, invalid or terminated or that the agent is exceeding or improperly exercising the agent's authority may rely upon the power of attorney as if the power of attorney were genuine, valid and still in effect, the agent's authority were genuine, valid and still in effect and the agent had not exceeded and had properly exercised the authority. The person is not required to ensure that the assets of the principal that are paid or delivered to the agent are properly applied.

This bill is HB2537; you can obtain a copy via this link.

Inasmuch as the proposed bill is based on a model uniform act, a successful attempt to sneak this legislation through the Oregon legislature by the banking industry will only encourage industry advocates in other states to do the same.

Those of you with any interest in curbing the home equity theft horror stories are encouraged to contact the Oregon House Judiciary Committee and tell them how you feel (Jennifer Ranstrom-Smith, Committee Assistant, 503-986-1513 Jennifer.RanstromSmith@state.or.us). (You might even want to e-mail them the following links that illustrate the rampant nature of deed and equity thefts throughout the country).

Go here for posts on the use of powers of attorney to ripoff the elderly of their home equity.

Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc. DeedGammaTheft FinancialAbuseOfElderlyAlpha

Homeowner Facing Foreclosure Out $10K, Faces Eviction Despite Hiring Loan Modification Firm & Attorney Accused Of Leaving 2,000 Cases Unattended

In Bakersfield, California, KGET-TV Channel 17 reports:

• A local family says they are victims of a foreclosure scam. They came to 17News because, they say, the lawyer they paid $10,000 to help them took the money and did nothing.

***

• ''We had to pay $1,500 a month,'' [homeowner Eddy Herrera] said. The ''lawyer, which is Mitch Roth, would negotiate with the bank and help us lower our payments. He was supposed to modify our loan.” The Herrera family says a representative from attorney Mitchell Roth’s office told them to send monthly payments to a foreclosure relief company called United First. Herrera says the representative told them to ignore all letters from their lender, that everything was being handled. But seven months and $10,000 later, their house went up for auction. [...] The house was sold at the auction. Herrera says the supposed mortgage rescue company had never contacted the lender and he and his family are being evicted.

***

• A spokesman for the State Bar says it shut down Roth’s law offices after he was hospitalized in January and left 2,000 cases unattended. But in the meantime, the Herrera family says they still feel scammed. In court on Monday they were given two weeks to move out their home.

For the story, see 17News Investigation: Family blames attorney for foreclosure.

Go here for the State Bar press release on their action taken on this business arrangement.

For a related post, see Federal Judge, State Bar Slam Attorney For Stiffing Clients Referred By Loan Modification Firm; Lawyer/Foreclosure Consultant Ties Now Facing Scrutiny. UnauthPractOfLawTheta

Attorney Agrees To Refund Upfront Fees For Failed Loan Modification Attempts Under Threat Of Bad Media Publicity, State Bar Complaints

In Newark, California, KGO-TV Channel 7 reports on the experiences of three local homeowners seeking to have their home loans modified with an area law firm:

• [Mika] Baba says she's regretted getting into [her home] loan almost from the beginning and has been unable to renegotiate it. Then she heard an ad from Lucas Law Center on the radio. "And that's why I called Lucas Law Center because they made the promise that they can do the modification. If they couldn't you'd get your money back. And at this point, I'm in a corner where I have no choice," said Baba.

• That's the same reaction Scott Castruita and Steve Ferdin had when they heard the same ad. "I called them up, so they said they could make all the phone calls for me and they knew people and they said they know how to get hold of the people at Indy Mac," said Castruita. Scott and Steve paid $3,200 up front to hire Lucas Law Center to negotiate a loan modification on their home in Antioch. Mika paid $3,700 to hire Lucas, and what do they say they got for their money? "They haven't done anything for me," said Baba.

***

• Mika, Scott and Steve all requested a refund from the Lucas Law Center. Lucas turned down Mika because she fell under two exemptions to its refund policy. She is in a negatively amortized loan and she had been previously denied for a modification. Those exemptions were stated explicitly in Mika's contract, but she said they were never explained to her.

• We called Lucas Law Center and it agreed to refund her money 100 percent. Scott and Steve also received a refund, after they threatened to file a formal complaint with the state bar.

For more, see Homeowners dissapointed with loan service.

Postscript:

When hiring an attorney in connection with a loan modification, a homeowner should ask upfront whether the attorney will engage in actual litigation in court, either defending against a foreclosure action, or initiating a lawsuit, either for:

• violations of applicable lending, consumer protection, and other laws; or

• in a non-judicial foreclosure state, asking a state court to intervene in a foreclosure attempt by obtaining a temporary restraining order in order to demand that a lender to produce the promissory and the associated legal documents proving that the lender has the legal right to conduct the foreclosure.

If an attorney holding him/herself out as doing loan modifications pockets thousands of dollars in upfront, or periodic fees without any intention of representing a homeowner in the actual litigation described above, the homeowner should seriously consider the possiblity of filing a complaint against the attorney with the state bar association for charging excessive fees(1) and for taking the client's case and failing to do what was in the client's best interest (as well as considering any possible malpractice claim against the attorney).

In California, complaints can be filed with the The State Bar of California. To file a complaint against a California attorney (or a loan modification firm for engaging in the unauthorized practice of law), see Overview Of Attorney Discipline System (go here for a Complaint Form).

In addition, consumers generally can avail themselves of the California State Bar's Mandatory Fee Arbitration Program (MFA), which is an informal, low cost forum for resolving fee disputes between lawyers and their clients. MFA arbitration is mandatory for the lawyer if the client requests arbitration.

(1) The Florida Supreme Court, in The Florida Bar v. Richardson, 574 So.2d 60 (Fla. 1990), quoted from one of its earlier decisions on the harm caused by attorneys charging excessive fees:

• Lawyers are officers of the court. The court is an instrument of society for the administration of justice. Justice should be administered economically, efficiently, and expeditiously. The attorney's fee is, therefore, a very important factor in the administration of justice, and if it is not determined with proper relation to that fact it results in a species of social malpractice that undermines the confidence of the public in the bench and bar. It does more than that; it brings the court into disrepute and destroys its power to perform adequately the function of its creation. Baruch v. Giblin, 122 Fla. 59, 63, 164 So. 831, 833 (1935).

The court in Richardson, in finding that the attorney fees charged in the case before it were clearly excessive, went on:

• Mr. Richardson is an officer of the court, subject to its orders. We find that these were clearly excessive fees and that the amounts he charged did in fact constitute a"social malpractice." Ethical Consideration 2-17 of the Model Code of Professional Responsibility explains that a lawyer must charge clients reasonable fees because the "excessive cost of legal service would deter laymen from utilizing the legal system in protection of their rights." This Court recognizes that a lawyer's fee will vary in accordance with many factors; however,we fully concur with the expert witness's statement in this case that all of the time a lawyer spends on a case is not necessarily the amount of time for which he can properly charge his client. As explained by the expert witness, "[I]t's the time that reasonably should be devoted to accomplish a particular task." This statement is consistent with the principles we set forth in Standard Guaranty Insurance Co. v. Quanstrom, 555 So.2d 828 (Fla. 1990), and Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145 (Fla. 1985), neither of which allows billing clients solely on billable hours or charging clients without determining what is the reasonable time to accomplish a particular task. Further, absolutely no justification exists to bill for twenty minutes for every phone call or for a minimum of forty-five minutes to prepare a page of a document without regard to the amount of time actually spent. UnauthPractOfLawTheta

Burden On Homeowner To Initiate Lawsuit To Employ "Produce The Note" Strategy In Non-Judicial Foreclosure States

In Atlanta, Georgia, WXIA-TV Channel 11 reports:

• With foreclosures all over the country reaching record levels, more and more people are beginning to fight back with three words that hit lenders like a fist: "Produce the note." "If a lender cannot produce the note," said bankruptcy attorney Howard Rothbloom, "it's no different than a person going to the bank trying to cash a lost check. If you don't have the note you can't prove that you don't have the mortgage."(1)

***

• But to be used here in Georgia, the three words have to be uttered by an attorney, not by you. That's because Georgia is a non-judicial foreclosure state, and for the court to intervene an attorney has to ask for a temporary restraining order. "So in order to demand that a lender to produce a note outside of bankruptcy court a borrower is going to have to sue the lender in state court and demand that the lender produce the note," noted Rothbloom.

For more, see Fight Foreclosure With Three Simple Words?

(1) And just like the lost check, even if the foreclosing lender or its agent can produce the note, it has the burden of proving that it has the legal right (ie. the legal standing) to enforce it (ie. endorsements, assignments, affidavits, powers of attorney, and any other required legal paperwork must all be in proper order). Copyright 2009 The Home Equity Theft Reporter (http:/HomeEquityTheft.blogspot.com) ThetaMissingDocsMtg

Florida Supreme Court Forms Statewide Task Force To Relieve Foreclosure Backlog

The Miami Herald reports:

• To sandbag the flood of foreclosures pouring into the state's underfunded court system, the Florida Supreme Court announced the formation of a statewide task force on Monday that will look for solutions to the docket backlog while ensuring borrowers and lenders are treated fairly.

• ''This is a hurricane that has hit our state,'' said Miami Circuit Court Judge Jennifer Bailey, who was appointed to lead the 15-member task force. "Over 75 percent of the incoming cases are mortgage foreclosures. Our dockets have exploded.'' The task force will take specific aim at integrating the growing patchwork of judicial rules that have been established by the state's circuit court judges as they seek to manage the influx of cases.

***

• Statewide, the time needed to complete a foreclosure has increased from roughly 150 days to around 300, leaving homes vacant longer and condo associations hurting from unpaid maintenance fees.

For more, see Task force to seek answer to foreclosure court backlog (The Florida Supreme Court is looking for ways to cope with the overwhelming volume of foreclosure cases coming into the system, including a mediation requirement).

Developer Accused Of Renting Out Long Island Mansion In Foreclosure To Unwitting Tenant; Renter Out $70K, Left Holding The Bag

In Bridgehampton, New York, the New York Post reports:

• The forecast calls for a summer bummer for a Florida woman who claims her dream Hamptons vacation plans have become a nightmare. Carole Via says a rich developer took her $56,000 deposit for a Bridgehampton mansion although it was to be auctioned off before the season began. As a result, Via, of Boca Raton, has filed a breach-of-contract suit against developer Michael Burns and the real-estate agent, Town and County Real Estate of East Hampton.

***

• Via said that in October, she signed a $140,000 personal lease with Burns for the summer of 2009 for his eight-bedroom mansion at 15 Bridge Hill Lane. The sumptuous 6,300-square-foot dwelling has a heated pool. She said she wrote a $56,000 deposit check to him and a $14,000 commission check to Town and Country.

• In the lease, Burns, 58, said he owned the property and had the right to rent it. But on Jan. 28, she said, Town and Country informed her there was a problem. Via said she learned that the mansion was actually owned by Burns' company, Brick Hill One Realty, a firm that he had placed in bankruptcy in August. The home was to be auctioned off before the summer began.

For more, see RENTER DEPOSIT-IVE SHE GOT RIPPED OFF.

For other posts involving tenants renting homes in foreclosure, go here, go here, go here, go here, go here, go here, and go here. Copyright 2009 The Home Equity Theft Reporter http:// HomeEquityTheft.blogspot.com SkimmingKappaRent

Landlord With Arizona Buildings In Foreclosure Faces Same Problem In Georgia; Tenants Face Water Shutoffs, Accumulating Trash

In Norcross, Georgia, WXIA-TV Channel 11 reports:

• Dozens of residents at a Norcross apartment complex are on edge, even though mounds of garbage piled at their front door have been hauled away. Plenty of problems remain at the Steeplechase Apartments on Singleton Road, now that the complex is a target for foreclosure.

***

• The California management company that owns this complex and four others in Metro Atlanta hasn't been paying the bills -- not for sanitation -- which is why the garbage piled up, and a community improvement group had to step in to pay for the cleanup. The management company didn't pay the power bill, so, no more electricity at the front office. [... Employee Tainia Haywood] says the management company e-mailed her to say the complex and others run by the Bethany Group are on their way to foreclosure. Eventually, it will come under new management -- no one's sure when.

For more, see Management Company Deliquent On Rent, Power.

Go here for other posts on Bethany Group buildings in foreclosure.

For more on the problems faced by the Arizona tenants of this landlord facing foreclosure, see:

• Weeds, overflowing garbage bins plague tenants,
• Arizona Landlord In Foreclosure Leaves Tenants In Over A Dozen Buildings Under Threat Of Utilities Shutoffs, Lack Of Maintenance. SkimmingKappaRent

3 Sentenced In Upfront Fee Loan Modification Scam; Prosecution Of 2 More Pending, 3 Others On The Lam

In Southern California, the San Diego Union Tribune reports:

• After pleading guilty to loan-modification fraud, three people connected with a company that scammed hundreds of distressed homeowners in Southern California have received sentences ranging from probation to six years in prison.(1) “There are a lot of these scam artists roaming around California looking for vulnerable people, so it's important to catch them and convict them and imprison them,” state Attorney General Edmund G. Brown Jr. yesterday. “It is also important to send up a flare for people in foreclosure to watch out.”

• In November, Brown announced the breakup of First Gov, a company based in San Bernardino. The firm took payments from troubled borrowers but did nothing to prevent foreclosures, officials said. First Gov offered to renegotiate loans and reduce mortgage payments. It charged upfront fees that ranged from $1,500 to $5,000, Brown said. Homeowners were told to stop making mortgage payments and end communications with their lenders.

For more, see 3 sentenced in scam over foreclosures.

For more on this case from the California Attorney General:

• Press release: Attorney General Brown Sends Perpetrators of Loan Modification Fraud to Prison,
• Felony Complaint - People v. Amador, et al.,
• Flyer and Envelope allegedly used by the defendants to solicit business.

(1) Rosa Conrado, 51, of San Bernardino was sentenced yesterday to six years, four months in prison for six counts of grand theft in connection with the scam, officials said. Alejandrina Maldonado, 33, of St. Lucie, Fla., was sentenced Feb. 26 to a three-year prison term for one count of grand theft. Martin Jesus Flores, 33, of Baldwin Park was given three years of probation yesterday, based on limited participation in the scheme. David Giron, 44, of Ontario, and Saul Amador, 23, of West Covina are scheduled for a preliminary hearing March 19 on charges of theft, money laundering and conspiracy. Three other alleged members of the group – Juan Jose Perez, 48, Isuara Hernandez, 33, of La Habra, and Antonia Gonzalez, 66, of San Bernardino – are believed to have fled the jurisdiction and may be outside the country, officials said. foreclosure rescue

New York Foreclosure Rescue Operator Back In The News

In Brooklyn, New York, The New York Times reports:

• In 2005, [Waver Brickhouse] fell behind on her mortgage payments and turned to a so-called rescue firm, which, court papers allege, tricked her into signing away the deed to her Brooklyn home. She says the company, Home Savers Consulting, secretly sold her home, with the help of a mortgage from IndyMac Federal Bank, and ran up huge new debts.

• Now broke, deeply embarrassed and facing the loss of her small row house in the Brownsville neighborhood, Ms. Brickhouse, 69, faces a new problem. She must convince the Federal Deposit Insurance Corporation, which last year took control of IndyMac, now insolvent, that her mortgage payments should not include at least $150,000 tacked on by fraud.

***

• Ms. Brickhouse has sued Home Savers,(1) and her case underscores the conundrum facing the F.D.I.C. as it wades through thousands of troubled mortgages it has inherited from failed banks, 40,000 from IndyMac alone.

***

• F.D.I.C. officials asked Ms. Brickhouse to forward financial information so they could work out arrangements for her to pay some portion of the $380,000 mortgage. Ms. Brickhouse acknowledges that she is responsible for the $213,000 on her original mortgage. But she refuses to pay any part of the mortgage that she said was obtained through fraud.

For more, see Mortgage Fraud Case Poses Federal Quandary.

For some of the legal documents filed in this case, see:

• Brickhouse v. Millett - Complaint & Notice of Removal to Federal Court,
• Brickhouse v. Millett - Memorandum of Law in Opposition to Motion to Dismiss.

Go here for other posts on New York City-area foreclosure rescue operator, Home Savers Consulting Corp.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

(1) According to the story, Ms. Brickhouse’s case has a persuasive ring to it, not least because one of those engaged in the alleged fraud, straw buyer Yolanda Millett, returned her deed and swore out an affidavit describing the scheme. In it, Ms. Millett accused Home Savers of misleading Ms. Brickhouse at every turn. “She did not at any time believe that ownership of the subject property passed to me,” Ms. Millett stated in the affidavit, “and her intent was never to relinquish ownership.”

Reportedly, Home Savers Consulting has been sued by homeowners in Brooklyn, Queens and Staten Island, and nearly every case alleges a similar pattern of deception: An owner behind on a mortgage turns in desperation to Home Savers, which secretly transfers the deed to a “straw buyer” with good credit who qualifies for a cash-out refinancing. Then, it is alleged, Home Savers drains the homes of equity. Jessica Attie, co-director of the South Brooklyn Legal Services Foreclosure Prevention Project, estimates that Home Savers extracted at least $5 million in equity from the homes of people in a handful of her cases. Legal services lawyers have frequently forwarded information on Home Savers to prosecutors, but no criminal cases have been brought.

Brooklyn DA's Office Joins Other Prosecutors With New Unit Specializing In Real Estate Crimes

In Brooklyn, New York, The New York Times reports:

• With an array of real estate crimes, ranging from deed forgery to mortgage fraud schemes, adding to foreclosure rates in Brooklyn neighborhoods, the borough’s district attorney, Charles J. Hynes, says the time has come for a specialized unit to investigate and prosecute them.

***

• Mr. Hynes said the new 12-member unit would be financed for two years with $875,000 in federal money and would help people like Levi Latham, 75, a Brooklyn retiree whose house was, in effect, stolen by a woman who took Mr. Latham’s personal information, a prosecutor said. After executing and recording a false deed, the woman is now listed as the owner of the house.

***

• Similar units have been created by prosecutors in other regions with high foreclosure rates, providing a sketch of how the housing crisis has unfolded around the country. An eight-member unit in the office of the Suffolk County district attorney, Thomas J. Spota, recently arrested more than two dozen people in a $9 million mortgage fraud scheme. In Prince George’s County, Md., a two-member unit in the office of the county state’s attorney, Glenn F. Ivey, is handling dozens of cases in the aftermath of a housing boom that resulted in hasty and often dubious mortgages. In Cuyahoga County, Ohio, one of the centers of the national foreclosure crisis, the authorities have prosecuted 219 people since January 2007, said Ryan Miday, a spokesman for the county prosecutor, Bill Mason.

For more, see Brooklyn Establishes Real Estate Crime Unit. DeedGammaTheft

Businessman Comes Clean In Court In Attempt To Swipe 141 Acres Of Farmland By Forging Dying Man's Will

In County Wexford, Ireland, Independent.ie reports:

• A WEALTHY businessman-turned-whistleblower cried [Friday] as he told a court how he and two other men forged the will of a bachelor farmer as he lay dying in hospital. Charlie O'Leary (50), of The Haggard, Ramsgrange, Co Wexford, whose conscience eventually got the better of him, pleaded guilty to forging a document purporting to be the will of Matthew Hayes [...].

• Sergeant Mick Troy told Wexford Circuit Court that two other people are also implicated in the crime, the beneficiary, referred to as Mr X, and a third person, referred to as Mr Y. Mr X was O'Leary's best friend at the time and Mr Y is a close relative of O'Leary's. Sgt Troy said no genuine will was ever found in the name of the late Mr Hayes. When he died, he left £99,000 in a bank account and 141 acres of farmland, then valued at £350,000.

For more, see Man forged dying farmer's will (Businessman gets suspended sentence after 'conscience gets the better of him'). DeedGammaTheft

Lender Unwilling To Foreclose Offers To Cancel Delinquent Home Mortgage To Dodge Prosecution In Upstate NY Building Code Case

In Lockport, New York, the Lockport Union-Sun & Journal reports:

• [I]n another ongoing case, an attorney for M&T Bank said the bank is willing to forgive its mortgage on 34 Pound St., in order to avoid prosecution on seven code charges there. Attorney Thomas Frederick said the bank is still owed $34,000 by David and Andrea Woods, the former occupants, but it willing [sic] to wipe out the mortgage and let the house be transferred to anyone who’s willing to make needed repairs on the roof and exterior.

• M&T started foreclosure proceedings against the Woodses but never completed them, [prosecutor Matt] Brooks said, meaning the property remains in the Woodses’ name. They only found that out recently, although they were evicted from the premises by the bank in 2007. The city went after M&T in light of the eviction, which Brooks said is akin to asserting ownership interest in the property.

For the story, see Housing Court orders ‘hazardous’ garage closed off.

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

Fannie Mae Extends Eviction Suspension Through March 31

Fannie Mae announces:

• Fannie Mae [Friday] announced it is extending the suspension of all eviction proceedings through March 31, 2009 as the company implements the Home Affordable Refinance and Home Affordable Modification initiatives as part of the Obama Administration's Making Home Affordable program.

• The company has also issued special foreclosure sale requirements in response to the Making Home Affordable program. A foreclosure sale may not occur on any Fannie Mae loan until the loan servicer verifies that the borrower is ineligible for a Home Affordable Modification and all other foreclosure prevention alternatives have been exhausted.

Source: Fannie Mae Extends Eviction Suspension Through March 31.

400 Sale Leasebacks Are Disguised Equitable Mortgages, Says AZ AG In Invoking State Consumer Fraud Act, TILA In Suit Against Foreclosure Rescue Firm

From the Office of Arizona Attorney General Terry Goddard:

• Attorney General Terry Goddard [Thursday] announced that he has filed a lawsuit against an alleged foreclosure rescue operation believed to have defrauded approximately 400 Arizonans of their homes.(1) This action comes as part of Goddard’s crackdown on con artists who prey upon vulnerable homeowners struggling to avoid foreclosure. "Instead of offering legitimate help to homeowners, this operation misled and exploited them to turn a handsome profit," Goddard said. "The housing crisis has given rise to a number of rescue scams, and we are going after them aggressively."

***

Among the allegations made in the lawsuit are:

• Falsely and deceptively representing to homeowners that they would save their homes when, in fact, the defendants structured the transactions to take ownership and equity away from homeowners for the benefit and profit of defendants,(2)

• Misleading homeowners and circumventing and concealing from them the defendants’ obligations and homeowners’ rights and remedies under a mortgage loan agreement,

• Evading the protections of the Federal Truth in Lending Act (TILA) which required defendants to disclose the annual percentage rate of the mortgage and the homeowner’s right to rescind the transaction within three days of receiving notification of the right.(3)

For more, see Terry Goddard Files Lawsuit to Stop Foreclosure Rescue Operation.

For the lawsuit, including details of how the alleged foreclosure rescue scheme operated, see State of Arizona v. Winer, et al.(4)

(1) The state AG alleged violations of the following Arizona laws:

• Consumer Fraud Act: A.R.S. §44-1521 thru 1534,
• Debt Management Companies Act: A.R.S. §6-701 thru 716,
• Mortgage Brokers Act: A.R.S. §6-901 thru 911,
• Mortgage Bankers Act: A.R.S. §6-941 thru 948.

In addition, the Arizona AG asserts that the sale leasebacks are loans/equitable mortgages pursuant to A.R.S. §33-702(A), A.R.S. §6-901, A.R.S. §6-941, and Merryweather v. Pendleton, 91 Ariz. 334, 372 P.2d 335 (1962). In the Merryweather case, the Arizona Supreme Court cited English common law dating back over 500 years when making the following observation, "The ruse of an absolute deed or deed with an option to repurchase has long been used in attempts to cut off a mortgagor's equity of redemption. Equity courts created the concept of equitable mortgages to avoid such abuses". Y.B. 9 Edw. IV 25, 34 (1470).

(2) In a 2006 Washington, D.C. case, the court rejected a foreclosure rescue operator's claim that the D.C. consumer protection statute was inapplicable. Specifically, the operator attempted to characterize the relationship between himself and a homeowner facing foreclosure as "a purchaser-seller relationship in which the [homeowner], in an arm's length transaction, sold her house to him in circumstances admittedly unfavorable to her but not of his making." The court found that, by presenting himself to the homeowner as a "foreclosure specialist" who would aid her in keeping her home -- and not as a prospective buyer, a merchant-consumer relationship was created, thereby making the D.C. consumer protection statute applicable. Byrd v. Jackson, No. 04-CV-940, 902 A.2d 778; 2006 D.C. App. LEXIS 362 (2006).

It appears that any attempt by the foreclosure rescue operator targeted in the Arizona AG's lawsuit to claim that the state Consumer Fraud Act is inapplicable in this case could very well meet with the same outcome as in the D.C. case.

(3) The sale leaseback arrangements in this case apparently did not violate any applicable state usury statute, since the complaint contains no allegation thereof. In Arizona, contractual arrangements that are found by a court to be nothing more than disguised loans masquerading as sale leasebacks (and other buyback arrangements) are subject to any applicable state usury statute. See SAL Leasing v. State ex rel. Napolitano, 198 Ariz. 434; 10 P.3d 1221 (Ariz. Ct. App. 2000).

(4) Last year, the Massachusetts Attorney General's office took a similar approach in the pursuit of a foreclosure rescue operator accused of scamming 26 homeowners out of the equity in their homes. Like the Arizona AG, the Massachusetts AG also invoked its state's consumer protection statutes and the equitable mortgage doctrine; and it alleged violations of the Federal Truth In Lending Act, among other state law violations. It was also alleged in that case that the sale-leaseback arrangements were usurious equitable mortgages (See Complaint - Commonwealth of Massachusetts v. Sohmer, paragraphs 68-70 and paragraphs 123-126). The Massachusetts AG ultimately reached a satisfactory settlement with the foreclosure rescue operator and the mortgage lenders involved in, and providing the financing for, the associated equity stripping transactions. See Massachusetts AG press release: Bankruptcy Court Approves Settlement Between Attorney General’s Office and Ten Mortgage Lenders and Servicers Involved in Foreclosure Rescue Transactions. Go here for the earlier posts on the Massachusetts equity stripping case.

Appeals Court Reverses $3M+ Jury Award To Equity Stripping Victims; Homeowners Forced To "Settle" For Triple Damages Under State Consumer Fraud Act

In a 2004 case, the Colorado Court of Appeals reversed a $3+ million jury verdict (which included $1.5 million in punitive damages) in favor of a Colorado couple who were victimized in a foreclosure rescue scam. In its ruling, the appellate court found that the damages awarded by the jury on six separate claims were duplicative. Accordingly, the court let stand only one of the awards and disallowed the remainder. That award, in the amount of $247,000 representing actual damages against those participating in the foreclosure rescue scam for violation of the Colorado Consumer Protection Act (CCPA), §6-1-101, et seq., was then tripled (for clear and convincing evidence of the existence of bad faith conduct on the part of the scammers) pursuant to §6-1-113 of the CCPA. Accordingly, the final award to the aggrieved homeowners was limited to $741,000.(1)

Source: Martinez v. Affordable Hous. Network, Inc., 109 P.3d 983, 2004 Colo. App. LEXIS 867 (Colo. Ct. App. 2004), rev'd on other grounds by Martinez v. Affordable Hous. Network, Inc., 123 P.3d 1201; 2005 Colo. LEXIS 1075 (Colo. 2005).

(1) 6-1-113(2)(b) entitles the winning homeowners to an additional award to cover their legal fees and court costs.

Prosecutors Looking Into Conduct Of Colorado Man In Alleged Foreclosure Rescue Scam

In Colorado Springs, Colorado, KKTV Channel 11 reports on a local homeowner facing foreclosure who claims that, based on false representations, she unwittingly signed her home over to an area foreclosure rescue operator. The operator allegedly has since rented out the home, is pocketing the rent, and is stiffing the mortgage lender out of its loan payments. The matter has gotten the attention of a Colorado regulator and a local District Attorney's office:

• Erin Toll, the director of the Colorado Division of Real Estate says, "It just frankly sickens me that people would take advantage of someone who's in a situation like this both financially and emotionally." She warns homeowners to be careful, adding, "You have a giant target painted on your back and hunters will come out and prey on you."

• Toll says since Zehnder is not a licensed realtor she's turning over [the homoewner's] complaint to the Colorado Attorney General's office. Toll says, "It appears from things I've found on the website that this person has done this before to other people and the Attorney General's office is very interested in this case."

***

• The El Paso County District Attorney's office [reportedly said] Zehnder was arrested [in the past] for two felonies ... forgery and the filing of false documents ... and received deferred sentences for each. Now the Economic Crimes Division is investigating him again based on [the homoewner's] complaint.(1)

For the story, see Beware of Foreclosure Deals.

(1) If, in fact, it can be proved that the homeowner was tricked into unwittingly signing away the deed to her home by the foreclosure rescue operator, the deed might be considered a forged document triggering the application of the Colorado forgery statute against the operator, despite the fact that the signature on the deed is genuine. See Forgery, 18-5-102(1)(c), Colorado Revised Statutes.

Further, if the homeowner were to prove, in a civil lawsuit, that she was fraudulently deceived about the nature of the document she signed that purportedly conveyed her title to the foreclosure rescue operator, so that she was excusably ignorant about what she signed, there is Colorado law that indicates that the deed she signed could be declared void from the time she signed it ("void ab initio") and, consequently, the home would still belong to her. For Colorado cases addressing the distinction between a deed that is void and a deed that is voidable, in the context of deeds procured by fraud, see:

Delsas v. Centex Home Equity Co., 186 P.3d 141; 2008 Colo. App. LEXIS 674(Colo. App. 2008):

• If a grantor is aware that the instrument he is executing is a deed and that it will convey his title, but is induced to sign and deliver by fraudulent misrepresentations or undue influence, the deed is voidable and can be relied upon and enforced by a bona fide purchaser. Fallon v. Triangle Management Services, Inc., 169 Cal. App. 3d 1103, 1106, 215 Cal. Rptr. 748, 749-50 (1985) (citation omitted).
• However, a deed procured by a particular kind of fraud, called fraud in the factum, is void. If a person has been fraudulently deceived about the nature of a document, so that he or she is excusably ignorant about what has been signed, courts recognize "fraud in the factum." Unlike other types of fraud, fraud in the factum yields an instrument that is void, and not merely voidable. Svanidze, 169 P.3d at 266 (citation omitted); see also Upson, 823 P.2d at 706; Dan B. Dobbs, Handbook on the Law of Remedies § 9.6, at 645-46 (2d ed. 1993).

Svanidze v. Kirkendall, 169 P.3d 262; 2007 Colo. App. LEXIS 1515 (Colo. App. 2007):

• [I]f a person has been fraudulently deceived about the nature of a document, so that he or she is excusably ignorant about what has been signed, courts recognize "fraud in the factum." See Meyers v. Johanningmeier, 735 P.2d 206, 207 (Colo. App. 1987) (explaining relationship between statutory defense against holders in due course of negotiable instruments and the common law defense of fraud in the factum).
• Unlike other types of fraud, fraud in the factum yields an instrument that is void, and not merely voidable. Akins v. Vermast, 150 Ore. App. 236, 945 P.2d 640, 643 n.7 (Or. Ct. App.), adhered to on reconsideration, 151 Ore. App. 430, 950 P.2d 907 (Or. Ct. App. 1997); Bennion Ins. Co. v. 1st OK Corp., 571 P.2d 1339, 1341-42 (Utah 1977).

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