Thursday, June 04, 2009

Almost Half Of All Mortgages Are Serviced Using One Firm's Data Processing System

The following is an excerpt from a recent press release from Lender Processing Services, Inc.:
  • Lender Processing Services, Inc. (LPS)(1) is a leading provider of integrated technology and services to the mortgage industry. [...] Approximately 50 percent of all U.S. mortgages are serviced using LPS's Mortgage Servicing Package (MSP). In fact, many of the nation's top servicers rely on MSP, including eight of the top 10 and 14 of the top 20. LPS also offers proprietary mortgage and real estate data and analytics for the mortgage and capital markets industries.

Go here for the Lender Processing Services press release.

For more on Lender Processing Services, Inc., see:

  • Bloomberg News: Lender Processing Falls 29% on Report of Inquiry (A ruling by Judge Diane Weiss Sigmund in U.S. Bankruptcy Court in Philadelphia questioned inaccurate court filings made by HSBC Mortgage Corp. in a personal bankruptcy case. HSBC relied on electronic information from an LPS system that manages foreclosure data),

  • The Wall Street Journal: DOJ Probing Mortgage Data Processing Firms (The Department of Justice is conducting a nationwide probe of the company whose automated systems handle half the mortgages in the U.S., looking for evidence Lender Processing Services Inc. (LPS) has "improperly directed" the actions of lawyers in bankruptcy court) (may require subscription; if no subscription, try here, then click link for the story).

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The use of these types of data processing systems in the context of filing foreclosure actions was the target of a scathing ruling (at page 58) in a recent Federal bankruptcy case in which the judge made this observation (among others):

  • The thoughtless mechanical employment of computer·driven models and communications to inexpensively traverse the path to foreclosure offends the integrity of our American bankruptcy system. It is for those involved(2) in the process to step back and assess how they can fulfill their professional obligations and responsibly reap the benefits of technology. Nothing less should be tolerated.

For the court ruling, see In re Niles C. & Angela J. Taylor (Case No. 07-15385-DWS, Bankr. E.D. Pa., April 15, 2009).

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The use of company employees to act as "multiple corporate hat-wearing dummy vice presidents" for the various lenders and loan servicing companies using these data processing systems when initiating foreclosure actions has also been the focus of some controversy. Go here for more on multiple corporate hat wearing dummy vice presidents.

(1) On July 2, 2008, LPS was spun-off from Fidelity National Information Services, Inc. through a tax free distribution of all of its shares to Fidelity shareholders. Form 10-Q for Lender Processing Services, Inc. http:/biz.yahoo.com/e/080813/lps10-q.html.

(2) This footnote is not from the court ruling. Reference here is being made to the assembly line, foreclosure mill law firms and their employees who, in my view, willfully blind themselves to the practices of the foreclosing lenders that they represent, and otherwise allow themselves to be roped in and used by their clients as mere lackeys in the foreclosure process. SloppyForeclosuresAlpha

Federal Jury Awards Forklift Operator $500K In Suit Against Out-Of-Control Bill Collector

In San Jose, California, the San Jose Mercury News reports:
  • With a straight back, short haircut and stern face, Manuel Faustos looks more like an Army sergeant than a farmworker, and he certainly doesn't sound like a happy man who stands to collect a lot of money from a bill-collection agency that hounded his family without mercy.

  • "I don't care about the money,'' Faustos said in the kitchen of a modest tract home in Gonzales, a farming town an hour's drive south of Silicon Valley. A naturalized U.S. citizen, he and his wife, Luz, speak mostly Spanish. "It was never about the money. It was about protecting my family, providing for my wife and children. These people threatened to take it all away from me.''

  • Sorry, he said, but he won't be laughing on his way to the bank to deposit a $500,000 check. That's how much money a federal jury recently granted the couple after a short trial in San Jose.

***

  • According to court records, [Georgia-based Credigy Services Corp.'s] callers threatened to take their home and savings, garnish Manuel's wages as a forklift operator and ruin their credit. Desperate for help again, the couple turned to the Watsonville Law Center, a nonprofit agency that represents the rural poor. The law center hooked them up with attorney Balam Letona, a Santa Clara law school graduate who seemed to be heaven sent. [...] After nine days in court, the jurors [...] awarded the couple $100,000 in damages and $400,000 in punitive damages.(1)

For the rest of the story, see Farmworker couple wins $500,000 verdict against bill collector.

(1) As collection activities rise, more people will seek relief under the Fair Debt Collection Practices Act, the Federal law that regulates the conduct of debt collectors.

New York AG Obtains Court Order Shutting Down Two Debt Collection Agencies For Illegal Business Practices

From the Office of the New York Attorney General:
  • Attorney General Andrew M. Cuomo [...] announced that his office has launched a statewide inquiry into debt collection companies. As part of the inquiry, the Attorney General’s Office obtained a court order against Lamont Cooper and his two debt collection companies, Emanee Development, Inc. and Dial Tech LLC,(1) under which the companies will shut down and Cooper will be forced to pay restitution to consumers statewide.

  • According to Cuomo’s Office, Cooper’s companies unlawfully lied to consumers, threatened to arrest them, and intimidated them into paying debts that they sometimes did not even owe. They would often call third parties like neighbors or employers to further embarrass and harass consumers. The Attorney General also announced that his Office has subpoenaed nearly 20 other debt collectors across the state in his ongoing investigation into various facets of the debt industry.

For more, see Attorney General Cuomo Launches Inquiry Into Debt Collectors Across New York State (Cuomo Shuts Down NY Collection Agencies That Threatened and Intimidated Consumers Into Paying Debts They Didn’t Owe; Sends Subpoenas to Nearly 20 Debt Collectors Statewide).

(1) According to the Attorney General's Office, Cooper operated Emanee and Dial Tech, which did business under the names of various shell companies and fictitious law firms across the state, including: Claims Process Services, Claims America, CMC Recovery Services, Lomax & Barnes and Murray, Bradshaw & Associates.

Wednesday, June 03, 2009

"Produce The Note" Approach Now Required Of Lenders In Nevada Foreclosures Where Homeowner Requests Mandatory Mediation

The Las Vegas Sun reports:
  • Homeowners facing foreclosure may have a new friend on their side, if they’re willing to pay for it — a judge. A new state law, signed by Gov. Jim Gibbons and which takes effect in July, allows homeowner-occupants facing foreclosure to demand a sit-down mediation with lenders, overseen by a retired judge or an attorney. It’ll cost homeowners up to $200, but it might help them save their homes.

***

  • [A]t best for homeowners, the process might stave off foreclosure altogether because of a major technicality. One of the more dramatic components of the foreclosure mediation law compels lenders to produce promissory notes, showing that money is owed, and deeds of trust, showing the banks’ security on the loans. If they can’t, then mediators could reduce the loans significantly, allowing struggling homeowners to stay put. “It’s a basic consumer protection that most states are looking at,” says Assembly Speaker Barbara Buckley, who wrote the bill. “We don’t want people paying mortgages to people who don’t own the mortgage.”(1)

***

  • Previous to the passage of the Nevada law, lenders here had to file three documents in the foreclosure process: a 90-day notice-of-default and election to sell, a 21-day notice-of-sale and a three-day eviction notice, [...]. Upon receiving the 90-day default notice under the new law, homeowners have 30 days to seek mediation.

For more, see Foreclosure help could hinge on who holds the note.

For a graphic illustration of how promissory notes get "chopped up" in the securitization process, see Why Your Lender May Not Have Your Mortgage Papers.

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, Go Here, Go Here, and Go Here.

(1) This new law comes on the heels of a recent Nevada bankruptcy court ruling encompassing 27 cases in which Mortgage Electronic Registration Systems, Inc. was prohibited from representing lenders seeking to foreclose on delinquent homeowners already in bankruptcy unless it could produce the actual loan note.

After Paying Firm $5,600 For Failed Loan Modification Of Unaffordable Mortgage, Brooklyn Homeowner Gets Needed Changes To Terms On Her Own

In Brooklyn, New York, Newsday reports:
  • After months of trying to get mortgage relief using American Modification Agency, Brooklyn resident Rolett Brown is now working with South Brooklyn Legal Services to try to get back the $5,600 she paid AMA, based in Hauppauge and founded by executive Salvatore Pane. He also owns Amerimod, a separate Uniondale company that's Long Island's largest modification firm.

  • Brown, who needed help after the monthly payment for her adjustable rate mortgage rose to $3,700 last July, said she paid AMA last summer, using two credit cards and a loan from her retirement fund. Her loan modification application was denied - twice. AMA wanted to try a third time. Brown said no. Then, she said, she connected with city officials and her bank's representatives and was able to get the changes she needed on her own. AMA hasn't refunded her money, she said. "I feel betrayed," Brown added.

For the story, see Foreclosure rescue firms under scrutiny (Federal and NY regulators moving to weed out scam operations with tighter rules).

Cost For Homeowners To Countersue Lenders When Contesting Florida Foreclosure Actions In State Court Skyrockets

The South Florida Sun Sentinel reports:
  • Starting [June 1], the cost to file a notice of foreclosure in Florida jumps dramatically. State lawmakers approved the hike from $301 to between $401 and $1,906, depending on the value of the property. Few people will shed any tears for the lenders and homeowners associations that have to fork over the extra cash.

  • But get this: homeowners and lien holders who want to contest a foreclosure in some way will have to pay plenty more as well. Those filing a foreclosure cross-claim, counterclaim, counterpetition or third-party complaint used to pay $295. Now the fee is $395 to $1,900, depending on the property value.

***

  • For the old foreclosure fees, click here. For the new foreclosure fees, click here.

Source: Filing a foreclosure notice in Florida? Prepare to pony up.

New York AG Files Suit Against Two Out-Of-State Debt Settlement Businesses; Accused Of Pocketing Fees, Failing To Fulfill Promises

From the Office of the New York Attorney General:
  • Attorney General Andrew M. Cuomo [...] announced a new development in his nationwide investigation into the debt settlement industry, filing suit against two debt settlement companies for fraudulent business practices and false advertising. Cuomo filed suit against CSA-Credit Solutions of America, Inc. (“CSA”),(1) based in Richardson, Texas, which is one of the largest debt settlement companies in the country. He has also filed suit against Nationwide Asset Services, Inc. (“NAS”),(2) based in Phoenix, Arizona, along with its affiliates - ServiceStar LLP and Universal Debt Reduction, LLC - and its marketer, FGL Clearwater, Inc. d/b/a American Debt Arbitration, based in Florida.

For more, see Attorney General Cuomo Sues Debt Settlement Companies For Deceiving And Harming Consumers (Cuomo Files Suit against Credit Solutions of America, One of the Nation’s Largest Debt Settlement Companies, and Nationwide Asset Services for Fraud and Deceptive Advertising; Launches Website - www.NYDebtHelp.com - that Explains Consumer Rights and Outlines the Attorney General’s Investigation).

(1) According to the NY AG, approximately 18,000 New Yorkers signed up as customers of Credit Solutions of America between its inception in January 2003 and September 2008. CSA promised a sixty percent reduction in its consumers’ outstanding debt, but an average of one percent of consumers received that savings. Many consumers have faced continued harassment and lawsuits by their creditors, despite CSA’s promise to intervene on their behalf. CSA has collected approximately $17 million in fees from New York-based consumers, AG Cuomo said.

(2) According to the NY AG, approximately 2,000 New Yorkers became customers of Nationwide Asset Services, Inc. between January 2005 and May 2008. NAS promised a twenty-five to forty percent reduction in its consumers’ outstanding debt, but only one-third of one percent of consumers received that savings. Customers suffered continued harassment and lawsuits by creditors and had their credit ratings destroyed, AG Cuomo said.

Tuesday, June 02, 2009

Wells Whistleblowers Call Lending Practices "Riding The Stagecoach To Hell" In Testimony Claiming Blacks Were Targeted In Baltimore City Subprime Suit

In Baltimore, Maryland, The Daily Record reports:
  • The city of Baltimore has beefed up its groundbreaking racial discrimination lawsuit against Wells Fargo with sometimes shocking testimony from a pair of the megabank’s former subprime-loan officers. The two whistleblowers claim their co-workers targeted black ZIP codes and churches, used software to “translate” marketing materials into African-American vernacular, and referred to subprime loans in minority communities as “ghetto loans” and to borrowers as “mud people.”

  • Their declarations were attached to an amended complaint filed Monday in U.S. District Court in Baltimore. The loan officers, who worked for Wells Fargo in the Baltimore-Washington area from the late 1990s until 2007, also alleged bank employees deceptively steered prime borrowers into subprime loans for their own financial benefit and joked that they were “riding the stagecoach to Hell.”

  • The city also filed declarations from four city residents who live near Wells Fargo’s foreclosed properties. They complained of squatters, rats and burst pipes, all of which have required attention from some city department. It cites 10 studies, including one specific to Baltimore, which studied reverse-redlining in black neighborhoods; and updated the foreclosure data to include the first part of 2009.

For more, see Ex-workers allege race-based loan approach at Wells Fargo (if link expires, try here for the full story, courtesy of findarticles.com).

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

California Foreclosure Consultants Now Required To Register With State AG, Post $100K Bond

From the Office of the California Attorney General:
  • Continuing his fight against scam artists who "prey on" vulnerable Californians, Attorney General Edmund G. Brown Jr. [Monday] issued a directive forcing foreclosure consultants to register with his office and post a $100,000 bond by July 1, 2009.(1) Those who fail to do so will be in violation of state law, subject to criminal penalties of up to a year in jail and fines ranging from $1,000 to $25,000 per violation. "California is awash with con artists who prey on vulnerable families facing foreclosure," Brown said. "By forcing foreclosure consultants to submit detailed information to my office and post a $100,000 bond, this registry will help bring long-overdue transparency to this shadowy world."

***

  • If the company violates the law, a court may order restitution to victims out of proceeds from the $100,000 bond. In order to obtain a Certificate of Registration by July 1, 2009, foreclosure consultants should send in their registration application and materials as soon as possible so they can be reviewed prior to July 1.

Go here for a copy of the registration forms.

For the entire press release, see Brown Directs Foreclosure Consultants to Register with his Office and Post $100,000.

(1) All foreclosure consultants operating in California must post a $100,000 bond and register with Brown's office by July 1, 2009 and submit the following information:

  • Name, address, and telephone number;
  • All names, addresses, telephone numbers, websites, and e-mail addresses used or proposed to be used in connection with their business;
  • Copies of all advertising;
  • Copies of each different contract the consultant will use with consumers; and
  • A copy of its $100,000 bond. loan modification

Alabama Family Settles With Feds Over Mold Infestation Caused By Roof Leak In Adjoining Foreclosed Townhome Owned By HUD

In Trussville, Alabama, WVTM-TV Channel 13 reports:
  • A Trussville family ousted from their home because of a mold problem has resolved their case with the Federal Government. Leslieanne Johannsen, her husband and two young children had to move out of their townhome on New Year’s Day when they discovered a roof leak in the adjoining unit had caused mold to spread like wildfire into their walls, floors as well as the heating and cooling vents.

  • That adjoining unit had become the property of the Federal Department of Housing and Urban Development after the home went into foreclosure in the fall of 2008. Local contractors had been handling the situation for HUD. But the Johannsens were not able to get a satisfactory response. Once NBC13HD became involved, officials from the Birmingham HUD office took made their first visit to the home to get a first-hand look at the damage. The Johannsens have now settled with the government.

For more, see Trussville family settles with HUD over mold infestation.

Fleeing Buffalo-Area Homebuilder Nabbed In Louisiana; Gets Shipped Back To NY For Prison Time After Ripping Off Customers

From the Office of the New York Attorney General:
  • Attorney General Andrew M. Cuomo [...] announced that a corrupt Buffalo-area homebuilder has been sentenced to prison for ripping off his customers for tens of thousands of dollars. Steven Wisniewski, former owner of Elite Custom Homes, was sentenced for grand larceny in Erie County today to 5 to 15 years in prison [...] In separate related charges brought by the Erie County District Attorney, Wisniewski was also sentenced to 2 1/3 to 7 years and 1 1/3 to 4 years to be served consecutively for a total sentence of 8 2/3 to 26 years, the maximum sentence. Wisniewski pleaded guilty to second-degree grand larceny last September. Wisniewski was originally scheduled for a court appearance on January 8, 2009, but he failed to appear. He was subsequently caught in Louisiana in March and brought back to western New York.

  • Wisniewski ripped off hard-working New Yorkers and then tried fleeing from the law,” said Attorney General Cuomo. “This so-called home contractor left one family with little more than a hole in the ground. He also tarnished the hard-earned reputations of all honest workers in the building trades.”

  • According to the felony complaint, [...] Wisniewski and [one couple] agreed on a contract for construction of a new 2,300 square-foot home and 600 square-foot garage [...] for $207,500. The family made several substantial payments to Wisniewski for labor and materials, but he never delivered, other than installing a construction driveway in October 2006 and installing concrete walls and footers for the basement in January 2007. Despite repeated requests, Wisniewski never refunded any of the money. The Office of the Attorney General hired a licensed contractor from Buffalo to assess the value of the work performed, which estimated to be $33,572. Of the down payments made to Wisniewski, the family lost $120,000.

For more, see Attorney General Cuomo Announces Buffalo Area Homebuilder Sentenced To Prison For Grand Larceny (Steven Wisniewski, former owner of Elite Custom Homes, caught in Louisiana after fleeing justice in western New York, gets maximum sentence).

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.

Go here for other posts on other home improvement contractors hammered by the NY AG. Cuomo hammers contractors StiffingContractorsTheta

Michigan AG Takes Heat For Lack Of Action On 15 Alleged Criminal Mortgage Fraud Cases Referred By State Finance Regulator

In Lansing, Michigan, The Michigan Messenger reports:
  • State Democrats are calling for greater accountability from Attorney General Mike Cox, whom they accuse of not acting on 15 cases of alleged criminal mortgage fraud forwarded from the state’s Office of Financial and Insurance Services since Jan. 1, 2008.

  • It’s horrifying,” said state Sen. Gretchen Whitmer, an East Lansing Democrat who is likely going to run for attorney general in 2010. Last week, Cox officially declared his intention to run for governor. “One of the things I am going to do is call on the Judiciary Committee to call a hearing. I will formally request that of Chairman [Sen. Wayne] Kuipers,” Whitmer said, referring to the Holland Republican who chairs the panel.

  • Matt Frendewey, a Cox spokesman, has repeatedly refused to return calls for comment about what his boss, who is facing a crowded Republican gubernatorial race, has done to address the referrals from the Office of Financial and Insurance Services.

For more, see Whitmer says AG Cox needs to answer questions about inaction on alleged mortgage fraud cases.

Monday, June 01, 2009

Manhattan Feds Bust Alleged Equity Stripping, Mortgage Fraud Scam; 13 Suspects Charged

In Islip, New York, the New York Daily News reports:
  • The feds busted up a $10 million mortgage scam that had left city and Long Island homeowners facing eviction. The scheme, run out of Bridgewater Funding in Islip, L.I., targeted dozens of residential properties in the $200,000 to $500,000 range, Manhattan prosecutors said [Thursday].(1)

  • The mortgage brokerage firm would approach homeowners who were facing foreclosure and convince them to sell their homes to straw buyers they had recruited, prosecutors said. The fraudsters then told the homeowners they could stay in their houses and that they would make the mortgage payments until they could resell the home at a profit. Using the names of the straw buyers, the ring then took out mortgages that were for more than what they had paid for the houses.

  • After pocketing the difference, Bridgewater never made any mortgage payments, leaving the straw buyers on the hook - and the homeowners facing eviction.

For more, see Feds bust ring in $10M mortgage scam.

For the U.S. Attorney (New York - Southern District) press release, see: THIRTEEN CHARGED WITH MORTGAGE FRAUD RUN OUT OF ISLIP, NEW YORK, MORTGAGE BROKERAGE FIRM BRIDGEWATER FUNDING, LLP.

(1) Those charged are loan officers Micah Meyers, Jakob Gearwar and a man known as Eddie Garcia; office manager Brian Urraro; loan processor Michael Didio; attorneys Stephen Caputo and Dawn Hughes; alleged straw buyers Jennifer Moschitta, Victor Avendano, Adrian Avendano, Janet McGuinness and Liam Leavey; and Daniel Hampton, charged with falsely verifying their employment information to lenders.

It's Standing Room Only At Sarasota Foreclosure Court's "Rocket Docket"

In Sarasota, Florida, the Tampa Tribune reports:
  • Lawyers and frantic homeowners cram together, creating a standing-room-only crowd before Judge Harry Rapkin's foreclosure court. [...] Rapkin, now retired, comes in on a part-time basis to oversee what's become known as the "Rocket Docket." And he gave everyone the same advice: "You need a lawyer." [...] The court, aimed at moving foreclosures through the judicial system at a quicker pace, stems from an effort to unclog dockets and still give the little guy a voice.

For more, see It's fast, furious at Sarasota's 'Rocket Docket' court.

Time To Batten Down The Hatches For Lenders Stuck Holding Vacant Foreclosed Homes As Hurricane Season Starts Today

In Lehigh Acres, Florida, The Associated Press reports:
  • Mike Manikchand points toward his neighbors in Lehigh Acres -- a half-dozen empty, foreclosed-upon homes, sitting on weed-strewn yards -- and he wonders: What will happen if a hurricane slams into southwest Florida this year? His simple answer: "A lot of these places will get destroyed.''

  • Unoccupied, these homes would be defenseless in a storm; there will be no one to put up shutters, batten down garage doors and otherwise secure homes. But that's not all. Nearby homes and their residents would also be at risk from wind-propelled debris.

  • Lehigh Acres and other communities at the epicenter of the nation's housing crisis are coming to realize that this year's hurricane season, beginning June 1, represents yet another pitfall. Hurricanes could make hazards of thousands of foreclosed-upon houses, and their diminished value could decrease even more.

For more, see Foreclosures add to hurricane hazards.

Sunday, May 31, 2009

Las Vegas Family Loses Home to Foreclosure Over $39 Fee, Despite Being Otherwise Current On Loan Modification Agreement With Lender

In Las Vegas, Nevada, KVBC-TV Channel 3 reports:
  • "Your house has been sold based on the fact you failed to send a $39 contribution. We figured by you not sending that, you didn't want to stay in the house."

  • That's what American Servicing Company, a division of Wells Fargo, told David Zepeda earlier this month. That conversation came after a notice of new ownership was taped to his door telling him, his wife, and his two children that their home had been sold May 8.

In April, the Zepedas reportedly signed a loan modification agreement that called for:

  • The bank lowered the interest rate on the loan, which totaled $280,000,
  • It gave them a fixed rate of five percent for 30 years,
  • To get the modification, they had to make five payments of $1,500, which was done,
  • The new, lower mortgage payment - according to the signed agreement - wasn't due until June 1.

However, the house was sold May 8. According to the homeowner, Wells Fargo reportedly told him its trying to rescind the foreclosure sale of his home to Deutsche Bank.

For more, see Did family lose house over $39?

South Carolina Homeowner Loses Home In Sale Leaseback Foreclosure Rescue Deal

In Myrtle Beach, South Carolina, WMBF-TV reports:
  • The home is the centerpiece of the American dream. A dream that for Larry Revels has turned into an unimaginable nightmare. "They said that they would stop the foreclosure and keep me in my house," he said. As his home was nearing foreclosure two years ago, he got a flier in the mail offering him a way out. He would sell his house then pay rent to continue living in it. The company paid $80,000 for it. But now they want him to pay $127,000 to get it back, he said. Plus, he's now paying $1,000 in rent instead of making his old $700 mortgage payment.(1)

For more, see Homeowners lose houses to scams.

(1) This deal appears to have some of the earmarks of an equitable mortgage (and, perhaps, a usurious equitable mortgage).

Colleges "Prowling" For Cheap Student Dorm Space Seek Out Desperate Developers Looking To Unload Unsold Condo Complexes

In Providence, Rhode Island, The Associated Press reports:
  • River views, granite countertops, stainless-steel appliances, 9-foot ceilings. This is student housing? When classes start this fall — if all goes as planned — more than 300 students at Johnson & Wales University will be living in Capitol Cove, an upscale condominium project that had been languishing on the market for more than six months.

***

  • Some universities around the country have found a silver lining to the real estate recession that has left condominium developers in the lurch. For less time and money than it would take to build a residence hall, universities in places like New York City and Ohio are buying or leasing entire condo projects.(1) And they are also eyeing vacant lots once targeted for high-end condos for use as retail and parking. "This is a bonanza of an opportunity ... for universities to acquire the space they desperately need," said Dan Fasulo, managing director of Real Capital Analytics.

For more, see Empty condos give universities new dorm space.

(1) In New York, Columbia University last year paid $67.6 million for a residence hall for graduate students and staff in the Riverdale neighborhood of the Bronx after a planned condo development called the Arbor couldn't sell out. In Ohio, Capital University bought a 30-unit building for $4 million in suburban Columbus that had been marketed as 55-and-older housing but is now reserved for about 60 upperclassmen in good academic standing.

Treasury Department Issues Alert On Scammers Using Fraudulent Promissory Notes & Bonds In Attempt To Buy Real Estate, Vehicles

The U.S. Treasury Department has informed the National Association of Realtors ("NAR") by letter of a new fraud that is making the rounds:
  • The Department of Treasury, Office of Inspector General (OIG) is investigating incidences whereby individuals are using fraudulent promissory notes and bonds to attempt to purchase vehicles and real estate. The OIG has been notified of numerous occurrences throughout the United States where fraudulent documents were used to attempt to purchase vehicles. Treasury OIG has also been made aware of incidents in Arizona and Colorado where similar fraudulent documents were used to attempt to purchase homes and an office building.

According to a related Treasury department press release:

  • Fraudulent seminars are being held throughout the United States, which teach attendees how to create the aforementioned fictitious documents and how to use federal routing numbers.

Go here for the entire NAR letter, here for the related Treasury department press release, and here for:

Saturday, May 30, 2009

Elk Grove Cop Charged With Lying On Mortgage Applications; Brother, Sister-In-Law Accused Of Pocketing $200K In Separate Refinancing Scheme

In Elk Grove, California, KXTV Channel 10 reports:
  • An Elk Grove police officer has been charged by federal authorities for allegedly lying on mortgage loan applications to buy two homes that later went into foreclosure. Hidayatullah Ali Khalil, 29, was arrested Thursday by the FBI on a three-count complaint and made an initial appearance in Sacramento federal court before being released on a $75,000 unsecured bond.

***

  • According to the complaint, Khalil pulled more than $100,000 in cash out of the Elk Grove house in two separate transactions. Property records show both homes were sold at auction last year. [...] The FBI said its investigation into Khalil was continuing, with possibly more searches and arrests to come.

  • Khalil's brother and sister-in-law also made an intial federal court appearance Thursday for their role in an alleged equity-stripping scheme involving a house in El Dorado Hills that later went into foreclosure. They, too, were released on bond. IRS criminal investigator Christopher Fitzpatrick said Amanullah and Muzdha Khalil lied on a refinancing application to pull nearly $200,000 in cash out of the house [...].

For the story, see Elk Grove Cop Charged with Mortgage Fraud.

Thanks to Tim McDaniel for the heads-up on this story.

Some Realtors Begin Warning Homeowners In Foreclosure Against Home Stripping

In Phoenix, Arizona, KPHO-TV Channel 5 reports:
  • Several Valley real estate agents are doing their part to prevent a new kind of crime. They are asking homeowners selling their foreclosed homes to sign disclosure forms saying they’ve been told stripping their homes is a felony. "Now I can sleep at night know I've given my clients all the information," Cari Gililland said. "What they choose to do from that point is their decision.”

***

  • Gilliland said owners of foreclosed homes started stripping their homes about one year ago, at the height of the foreclosure crisis. "People will take the light fixtures. They’ll take the sinks. They'll take the kitchen cabinets. They'll take the carpet. All kinds of stuff. They'll take anything. Anything they can get their hands on,” she said.

For more, see Valley Realtors Help Prevent New Crime.

See also, The Arizona Republic: Foreclosure home strippers can face arrest.

Go here for other posts on pre-foreclosure homeowner fixture stripping. foreclosure fixture stripping apple

More Problems With Loan Modification Firms

The following links are to stories on financially strapped homeowners reporting problems with loan modification companies they hired to help resolve their mortgage problems:
  • Oceanside, California: Couple brings loan modification fees into question. Warnings cautioning homeowners about paying upfront consultant fees in last-ditch efforts to avoid foreclosure may have been too little, too late for homeowners Ryan Walker and Kelly Hart. “She told us we were perfect candidates,” Hart said. “We met all the qualifications for a modification. They said it would be 30 to 45 days.” That guarantee was never made in writing, however. “Their attorney supposedly had a 99 percent success rate when working with candidates like us,” Walker said. “She sold us a good story.” In October 2008, they paid the $3,495 service fee with a cashier’s check hoping to have some financial relief by the end of the year. In the nearly seven months since, Walker and [Hart] have received about 30 e-mails from Mary Moi, the Better Life modification specialist assigned to their case after they paid the fee, but there has been no change in the status of either of their mortgages.

  • Indianapolis, Indiana: Hoosiers falling victim to foreclosure scams. Laura Bailey and her husband lost their jobs and missed mortgage payments. The bank foreclosed and a sheriff's sale notice arrived. Desperate, they called a mortgage foreclosure consultant. "When someone tells you 'for this amount of money we can stop all this,' you think 'great,'" said Bailey. New Hope Modifications took $1,250 of the couple's money, then shut down. The Federal Trade Commission charged the New Jersey company with false advertising. It claimed it was part of the non-profit, government-endorsed mortgage assistance network. New Hope is one of many suspected fraudulent businesses authorities are trying to close. "They are like vultures. They go after people who are down on their luck," said Bailey.

  • Phoenix, Arizona: Loan modification scam leaves Phoenix woman facing foreclosure. Not one but two Valley families fell for the same promise, come up with some cash and we'll save your home from foreclosure. Weeks and then months went by and the families still found themselves facing foreclosure. Their mortgages were not modified. That’s when law enforcement got involved and so did 3 On Your Side. In one particular neighborhood alone, two houses back to back both signed up with Jose Chavez. In total, Chavez reportedly collected $8,000 in cashier’s checks. Phoenix police and the FBI got involved and they are now looking in to theft allegations against Jose Chavez.

  • Middletown, Pennsylvania: Couple lose home despite ability to pay (One payment was returned, and mortgage service firm refused to negotiate after they got behind). After inadvertently failing to mail a mortgage payment, Richard & Patricia Meredith's mortgage company, Wells Fargo, threatened foreclosure. About the same time, the Merediths got a postcard from a foreclosure rescue company called American Housing Authority in California offering to help. It seemed to be just what they were looking for, Patricia said. American Housing Authority told them to send $4,500 to Wells Fargo, but the money was returned for reasons the Merediths can't explain. American Housing Authority started demanding payments to continue negotiating on behalf of the couple, the Merediths said. They sent the company $1,200 in 2007 but balked when it asked for more, because they hadn't seen results. In February 2008, the Merediths' home was foreclosed on by Litton Loan Servicing in Houston, which services Wells Fargo loans. As for the money and time the couple spent with American Housing Authority, it's not clear what, if anything, the company did for the Merediths. Though the Pennsylvania attorney general's office has had no dealings with American Housing Authority, the company has been sued by the attorneys general in several other states, including Illinois, Ohio and Minnesota. A contact number for American Housing Authority could not be found.

Rescuing Starving, Abandonded Animals Left In Foreclosed Homes No Longer Illegal In Gilbert

In Gilbert, Arizona, The Arizona Republic reports:
  • Gilbert police and town employees can now rescue abandoned or distressed animals from foreclosed homes. That will be welcome news for the increasing number of cats, dogs and other pets who have been abandoned when their owners let their homes go into foreclosure.

  • Until Town Council last week amended its animal control ordinance, town personnel could do nothing about the abandoned pets, even if the animals were in obvious discomfort or pain. "Up until this ordinance, pets that were abandoned or mistreated, we didn't have the authority to treat these animals unless we could locate the owner and have them voluntarily give them up," said Sgt. Mark Marino, a police spokesman.

***

  • The number of incidents of abandoned pets has skyrocketed over the past year as police responded to more calls about pets barking or meowing in empty homes.

For more, see Workers now allowed to help deserted pets.

Friday, May 29, 2009

Minnesota Feds Convict Mortgage Broker In Equity Stripping, Foreclosure Rescue Scam; Victims Duped Into Believing Deals Were Mere Refinancings

From the Office of the U.S. Attorney (Minnesota):
  • A federal [trial] jury [...] convicted a 41-year-old Prior Lake man on seven criminal counts in connection with an equity-skimming scheme that targeted vulnerable homeowners. After more than six hours of deliberation, on May 20 in St. Paul, a jury found Michael Fiorito guilty on all counts against him, including one count of conspiracy to commit mail fraud and six counts of mail fraud.

  • According to the indictment and evidence presented during the nearly three-week trial, Fiorito was a mortgage broker at three different Minnesota mortgage companies from 2003 through January 2007. Working with his assistant, Kristin Louise Jerde, he devised a scheme to defraud homeowners who were in foreclosure or behind on their mortgage payments.

  • Specifically, Fiorito and Jerde caused homeowners to refinance their homes. They then stole some or all of the equity checks produced through the refinancing process. They also induced homeowners to sell their homes to Fiorito and then stole the checks paid to the victims out of the closing of the sale. Many of the victims who sold their homes to Fiorito did not know they were actually selling their homes because Fiorito misled them into believing that they were only refinancing their homes.

***

  • Fiorito sought out and contacted homeowners and encouraged them to hire him to arrange a refinancing or sale. In some cases, Fiorito promised homeowners that they would receive checks in the amount of the equity in their homes, but he then either intercepted the checks or else used physical intimidation to force homeowners to endorse the checks over to him. In most cases, Fiorito caused the homeowners to execute powers-of-attorney appointing him as attorney-in-fact for the homeowners, which facilitated Fiorito’s theft of checks issued to homeowners when the transactions closed. The homeowners testified at trial that they did not know they had signed documents granting Fiorito permission to take their money. [...] Between January 2005 and March 2007, Fiorito fraudulently converted to his own use more than $400,000 in equity from at least 17 victims, [...].

For the U.S. Attorney press release, see Jury convicts former mortgage broker of defrauding vulnerable homeowners in equity-skimming scheme.

NY Judge Gives Go-Ahead To Tax Foreclosure Sale Despite Property Owner's Failure To Receive Notice Of Action While In County Jail On Unrelated Matter

In Canandaigua, New York, the Daily Messenger reports:
  • A property that was slated to be sold at Ontario County’s foreclosure auction May 6 escaped the initial sale. But now it will be sold, following a judge’s decision. The owner of 4530 Blossom Road in Gorham sued the county “over notice issues,” county Assistant Attorney Gary Curtiss said after a meeting Wednesday, [...]. Representing the property owner was attorney David Whitcomb.(1) [...] The outcome of the recent case is “unfortunate,” said Whitcomb, [...].

  • In the case of the Gorham property, the owner maintained she never received the notices from Ontario County warning her about the back taxes owed, said Whitcomb. The woman was in Ontario County Jail, serving time for driving while intoxicated, he said. The county’s certified letters sent to her address came back unclaimed and letters sent by regular mail never came back, he said. The woman was in a county facility and the county should have known she didn’t get the notices, said Whitcomb. Within days of hearing arguments in the case earlier this month, state Supreme Court Judge Craig Doran ruled the county could auction off the property. The lot with ranch home at the corner of Blossom Road and Summit Parkway, assessed at $61,500, will go for its highest bid of $32,000.

For more, see Property to be sold by county after lawsuit.

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

(1) Whitcomb also represented a property owner last year who sued the county over a foreclosure. But in that case, the owner won and was able to keep his parcel. A panel of judges with the state Appellate Division’s Fourth Department overturned a previous ruling that would have allowed the county to auction the parcel over $24 in interest owed by the property owner. foreclosure faulty notice

Watch Out For Mail Solicitations Simulating Official Forms & Letters From Government Agencies Offering Mortgage Help

The New York Times reports:
  • The letter may look like a government form. The logo may seem official. The Web site address may sound like an agency that can help. But there's a good chance it may all be a scam.

***

  • ''With people losing homes, you're at your most vulnerable,'' said Roscoe Howard, a Treasury Department spokesman. ''It's a lot like being a poor swimmer and being thrown into a lake, you're going to reach for whatever you can.'' Even for wary consumers, it may be hard to tell if the line being thrown by a company will sink you.

  • A letter sent out earlier this month by Bridgewater, N.J.-based Financial Solutions Today LLC is a good example of the difficulty assessing a company. The letter is designed to resemble a W-2 or other form from the Internal Revenue Service, with boxes across the top and a similar typeface. It suggests the recipient ''may be eligible for a special modification program according to guidelines created in conjunction with the Government Stimulus Program HR 1106: Helping Families Save Their Home Act.'' The bill that bore that number in the House of Representatives actually used the plural ''Homes'' in its title, a subtle misspelling that consumer advocates say is the type of thing that should be a red flag for recipients.

For more, see Mortgage Relief Scams Mushroom as Crisis Winds On. loan modification

Missouri AG Files Suit Against Two Mortgage Refinancing Firms Accused Of Calling Consumers Having Phone Numbers On State's "Do Not Call" Registry

In Jefferson City, Missouri, the St. Louis Post Dispatch reports:
  • Missouri Attorney General Chris Koster announced today suits against two area mortgage-refinancing companies that allegedly called consumers who have placed their telephone numbers on the state’s Do-Not-Call registry. Koster’s office says in a press release that the suit is part of a “zero-tolerance stance against illegal mortgage operations.”

For more, see Koster: Mortgage-refinance firms called consumers on no-call list.

For the Missouri AG press release, see Attorney General Koster sues to stop mortgage-refinancing telemarketer from calling Missourians on the no-call list.