Tuesday, September 15, 2009

Wells Fargo Cans Squatting Senior VP For Using $12M Beachfront REO As Party House

In Malibu, California, The Los Angeles Times reports:
  • Moving to contain a public relations mess, Wells Fargo & Co. fired a top executive accused of using a bank-owned Malibu beach house to entertain her family and friends. Cheronda Guyton, a senior vice president responsible for commercial foreclosed properties, broke company rules barring personal use of bank property, Wells Fargo said in a statement Monday. The Times reported last week that Guyton had been spotted by neighbors spending time at the Malibu Colony home with her family this summer. At a party in August, guests were ferried to the beach house from a yacht, residents of the enclave said.

***

  • Wells Fargo's quick action after The Times' report last week reflects the bank's recognition that the case could become a liability, especially in light of its acceptance of federal bailout money, ethics experts said.

***

  • Wealthy real estate shoppers who had gotten wind of the house being held by the bank said they were frustrated they could not offer to buy it. Local real estate agents said they began to get calls from eager would-be buyers -- but the house wasn't for sale.

For more, see Wells Fargo fires executive accused of using bank-owned Malibu home (Cheronda Guyton, a senior vice president responsible for commercial foreclosed properties, had been seen by neighbors using the Malibu Colony house lost by victims of Bernard Madoff's Ponzi scheme).

See also:

Home Lost To Foreclosure Despite Loan Servicer's Failure To Complete HAMP Review, Says New Hampshire Couple

In Franklin, New Hampshire, New Hampshire Public Radio reports:
  • About a month ago, homeowners Sharon Gagnon and her husband were facing foreclosure. But they sought help from a HUD certified housing counselor, and got a modification with Chase Bank under the federal Making Home Affordable Program. Gagnon had recently sent in her signed authorization with a check when a real estate agent came by and told her she didn’t own her house anymore.

***

  • According to Gagnon and her counselor, Chase bank, a unit of JP Morgan Chase, accepted the modification and the check that Gagnon sent. But the bank then sent the check back with no explanation of why they were doing it. In the meantime, Sharon Gagnon got another surprise in early August. And the next thing I know is there’s an eviction notice on the door, from the sheriff, telling us we need to be out by September 15th.

***

  • Under the HAMP [Home Affordable Modification Program] regulations you’re not allowed to proceed on a HAMP eligible family on a foreclosure or scheduled sale date without having the HAMP review completed and foreclosures have continued to proceed as if everything is normal and there’s no need to do the HAMP review. A spokesman for JP Morgan Chase says the company won’t comment on this story, except to say the Gagnon case is under investigation. Gagnon’s attorney, Peter Wright at Franklin Pierce Law Center, says his team is already working on trying to keep the family in their home.

For more, see A Franklin Family Facing Eviction Thought They Had Saved Their House.

Punishing Attorneys Offering Bogus Loan Modification Help To Financially Strapped Homeowners A Priority For Incoming State Bar President

In Los Angeles, California, The Los Angeles Times reports:
  • Crooked lawyers have long besmirched the profession's image, but the scale of their involvement in the loan modification scandals plaguing California homeowners has taken an unprecedented toll, the incoming president of the State Bar of California says. The proliferation of complaints against lawyers who said they could help rescue clients threatened with foreclosure has hurt tens of thousands of people and confronted the bar with a mounting and costly disciplinary burden, said Howard Miller, a partner with the Los Angeles plaintiffs' firm of Girardi & Keese. "There are at least hundreds, and perhaps more, perhaps thousands, of lawyers in California who deliberately reached out to obtain money from people at the most vulnerable point in their lives and, as near as anyone can tell, did nothing to help them," Miller said, vowing to make a priority of punishing such misdeeds during his yearlong tenure.

***

  • Miller was a key supporter of a new rule of professional conduct requiring attorneys to tell clients if they don't carry malpractice insurance. [...] The estimated tens of thousands who lost nonrefundable deposits to unscrupulous lawyers advertising their loan-modification services could have benefited from the knowledge that those attorneys were, for the most part, uninsured, Miller said.

For more, see New head of State Bar of California assails mortgage modification scammers (Los Angeles attorney Howard Miller lambastes lawyers who claimed to be offering help to homeowners facing foreclosure but did nothing except take their money).

Massachusetts Regulators Asleep At Wheel During Recent Subprime Era?

In Boston, Massachusetts, New England Cable News reports:
  • Where were Massachusetts banking regulators as the subprime mortgage crisis exploded all around them? That question is the focus of a special investigation by the New England Center for Investigative Reporting at Boston University - a collaborative effort that includes NECN, WBUR radio, The Boston Globe and Banker and Tradesman. Did state regulators protect the public or fall asleep at the wheel?

For more, see Mass. regulators lag New England in disciplining brokers and lenders.

See also, The Boston Globe: Few Mass. brokers hit for abuses (Mortgage lending regulators lag peers in other N.E. states).

City Concerned About Effect On Tenants From Unwinding $5.4B Purchase Of 11,000+ Unit Apartment Complexes Gone Bad

In New York City, The New York Times reports:
  • Three years ago, the sale of the 110 red-brick apartment buildings at Stuyvesant Town and Peter Cooper Village in Manhattan represented the most expensive American real estate deal in history.(1) Now the buyers are running out of time and money. Jerry I. and Rob Speyer and their partner, BlackRock Realty, who paid $5.4 billion for the quiet middle-class redoubt near the East River, have seen the property lose more than half of its value, and the income from rent — down 25 percent from its peak — covers less than half of their debt payments. Real estate analysts say they expect that by December, the partnership will run out of an additional $890 million set aside for apartment renovations, landscaping and interest payments, and that the owners are at “high risk” of default on $4.4 billion in loans.(2)

***

  • Stuyvesant Town and Peter Cooper Village are in trouble. City officials have been monitoring the looming crisis and how it might affect a complex that has served as an oasis of affordability in Manhattan for middle-class New Yorkers. Some 6,875 of the 11,227 apartments at the complexes are rent regulated. “We are absolutely keeping an eye on it,” said Rafael E. Cestero, the city’s housing commissioner. “It’s an iconic complex.” Referring to the people who were part of the original real estate transaction, he went on, “Those folks are going to take their lumps. We are looking at how we can ensure that the rent-stabilized units and the families that live there and families that could live there in the future could be insulated from the unwinding of this deal.”(3)(4)

For the story, see Buyers of Huge Manhattan Complex Face Default Risk.

(1) The residential complex, the largest of its kind in New York City, covers approximately 80 acres, or a full 10 city blocks, between First Avenue and Avenue C, and 14th Street and 23rd Street, and consists of 110 apartment buildings comprising 11,200 units, which house at least 20,000 people.

(2) The purchase of Stuyvesant Town and Peter Cooper Village was one of the more scrutinized of its deals in recent years, the story states. The winning bid presumed the partnership could increase profits by renovating and deregulating apartments, but the owners have been unable to quickly convert apartments to market rates.

(3)Residents are increasingly concerned that the maintenance of the buildings is slipping, even as they are getting hit with a flurry of potential charges for major capital improvements,” said Daniel R. Garodnick, a city councilman who lives in Peter Cooper Village.

(4) The underwater landlords in this story have gone to the New York Court of Appeals (the state's highest court) to appeal a recent state intermediate appellate court ruling that could result in them having to pay more than $200 million to repay the tenants in these complexes for illegal rent increases over the last four years in connection with improperly deregulating more than 3,000 apartments while receiving special property tax breaks from the city. See:

Monday, September 14, 2009

Head Of Maryland-Based Foreclosure Rescue Firm Gets 78 Months For Role In Peddling Bogus Equity Stripping Sale Leasebacks To Homeowners In Foreclosure

From the Office of the U.S. Attorney (Maryland):
  • U.S. District Judge Deborah K. Chasanow sentenced Michael K. Lewis, age 57, of Takoma Park, Maryland today to 78 months in prison, followed by three years of supervised release, for conspiracy and bankruptcy fraud arising from a scheme in which he and his conspirators offered to help financially vulnerable individuals save their homes from foreclosure, and instead defrauded homeowners and mortgage lenders, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

***

  • According to his plea agreement, [...] Lewis aired television advertisements that targeted financially vulnerable individuals, representing that he could improve their credit, save their homes from foreclosure and assist them with bankruptcy. [...] Lewis specifically targeted individuals who owned and had equity in their homes, but were facing foreclosure on their homes because of their inability to make monthly mortgage payments. The goal of Lewis and his co-conspirators was to steal the homeowners’ equity out of their property by inducing the homeowners to sell their property to Earnest Lewis and converting sale proceeds to the use of the conspirators. Lewis and his co-conspirators did this by fraudulently representing to the homeowners that their “lease/buy-back program” would help the homeowners to keep their homes. Lewis and Winston Thomas, a senior loan officer with a mortgage lender, told the homeowners that the “good credit” of Earnest Lewis would be used to temporarily refinance their homes, that they had to sign their homes over to Earnest Lewis and that they could repurchase the homes in roughly one year, or once they regained their financial footing. During the interim, they could remain in their homes only by paying inflated “rent” and fees by having their bank accounts directly debited to an account belonging to co-conspirator Cheryl Brooke’s company “In the House Technologies.” Brooke then made payments to Earnest Lewis and Thomas, with the remaining funds being used by Michael K. Lewis and Brooke for their personal benefit.(1)

For the entire U.S. Attorney press release, see Leader of Mortgage Fraud Scheme Sentenced to 6 ½ Years in Prison - Targeted Victims with TV Ads.

See also, WBAL-TV Channel 11: Lewis Gets 6.5 Years In Prison For Mortgage Fraud (Michael K. Lewis Convicted Of Defrauding People Out Of Homes).

(1) Earnest Lewis, age 52, of Takoma Park, Maryland, was sentenced to 54 months in prison, for his role in the scheme. Cheryl Brooke, age 52, of Upper Marlboro, Maryland, and Winston Thomas, age 43, of New Carrollton, Maryland pleaded guilty to their participation in the scheme and face a maximum sentence of 20 years in prison for the conspiracy to commit wire fraud. Michael K. Lewis Financial Diet

Texas Judge Slams Foreclosure Rescue Operator With 350 Months For Pocketing Upfront Fees In Scam Offering False Promises Of Foreclosure Help

In San Antonio, Texas, the San Antonio Express News reports:
  • A San Antonio woman who defrauded several people out of more than $70,000 in foreclosure-rescue scams got a hard lesson Friday. After reportedly telling a victim a Spanish phrase along the lines of “Payback's a (expletive),” Rosario Castro Divins was sentenced to nearly 30 years in prison for her scams, the comment and misbehaving in jail. The comment came during a break in Divins' trial in June, and its recipient — one of her fraud victims — took it as a threat, the victim and a witness testified Friday.

  • The 350-month sentence imposed by U.S. District Judge Fred Biery was an exclamation point on a case that screamed a question even Biery asked: Where were state and local authorities when Divins was dishing out various forms of fraud for more than 30 years? The judge also ordered restitution, but acknowledged it wouldn't be likely any victim would be repaid.

  • An investigation by the San Antonio Express-News found disinterested police agencies, Texas attorneys general, assistant district attorneys and others nudged aside complaints as civil matters between Divins, 55, and her victims. Some of the homeowners ultimately lost their houses while other managed to stave off foreclosure through no help from Divins.

***

  • Biery noted it wasn't until Divins' shenanigans spilled into federal bankruptcy court that she finally was caught. The FBI investigated her after she was found in contempt in bankruptcy court and violated orders to stop her misleading, direct-mail foreclosure-rescue ads. Biery also read her 32-year criminal record of harassment, stalking and threats, including one case where she called one person 50 times. “Other than that, you've been a model citizen,” Biery said, sarcastically. [...] Biery said he admonished her for taking advantage of desperate people who shared her cultural, ethnic and religious background and trusted her.

For the story, see Woman sentenced to almost 30 years for fraud.

For the U.S. Attorney press release, see San Antonio Woman Sentenced To Federal Prison For Criminal Contempt And Mail Fraud In Foreclosure Prevention Scheme.

For the original indictment, see U.S. v. Divins.

Bond-Posting Pals Allowed To Reclaim Homes Previously Forfeited When Bailjumping Friend Fled Country As Brooklyn Federal Judge Lets Them Off The Hook

In Brooklyn, New York, the New York Post reports:
  • Pals who posted bail for a shady former Credit Suisse broker who fled to Spain are off the hook for backing the crook, a federal judge ruled [Wednesday]. Brooklyn Federal Judge Jack Weinstein let Julian Tzolov's friends reclaim their homes after prosecutors agreed to seize only the broker's assets to cover his $3 million bail bond. Tzolov, 36, was captured on the southern coast of Spain in July after a month-long manhunt and agreed to testify against his partner in crime, longtime friend Eric Butler. [Wednesday's] ruling was an about-face for Weinstein, who, when he first learned in June that Tzolov was missing, angrily told prosecutors that the friends should "lose everything."

For more, see Judge bails Tzolov pals.

For the earlier story on this bailjumping broker leaving his friends holding the bag, see Broker Fugitive Tzolov Leaves Friends Homeless.

Brooklyn Trial Judge Known For Slamming Sloppy Lenders In Foreclosure Actions Featured On CBS Evening News

In Brooklyn, New York, the CBS Evening News recently featured state trial judge Arthur M. Schack, a jurist who has developed a reputation for booting foreclosing lenders and their attorneys for sloppy, error-filled filings in foreclosure proceedings:
  • He's rejected more than 40 of the 100-plus foreclosure filings that have crossed his desk in the last two years because of what some call "small" errors in the bank's paperwork, from incorrect dates and signatures to unclear proof of ownership. "About half of the cases in the last two years you've thrown out for what some would describe as a procedural - small issue, " [correspondent Seth] Doane said. "I don't think it's a small issue when somebody lives in a house and you're going to disrupt their lives and take away their home," Schack said.

For the story, see N.Y. Judge Takes on Foreclosures (Arthur Schack Looks beyond the Routine Process for a Chance to Help the Little Guy).

To watch the story, see Fighting Foreclosure.

Battle Against Rent Skimming Florida Condo Investors Intensifies As Blanket Receivership Court Orders Become Broader In Scope

The South Florida Sun Sentinel reports on how the fight being waged by condo associations across South Florida and the state by seeking court-ordered, blanket receiverships against deadbeat investor/unit owners continues to heat up:
  • The first blanket receivership order was petitioned by the Association Law Group and signed in March by a Miami-Dade County judge on the behalf of the Oaks at Miami Gardens. Since then dozens have been signed or are pending in county courts throughout South Florida, as well as Orange and Seminole counties, attorneys say.

  • And as the practice spreads throughout the state, the blanket receivership orders also seem to broaden in scope. Last month, [professional receiver Seth] Heller was appointed as the receiver in Seminole County for an Orlando condo association, the first blanket receivership order outside South Florida. The order provides receivers like Heller with more authority compared to previous receivership orders granted in South Florida, including the authority to collect money from rent-paying tenants as well as those who don't pay rent but live in a unit owned by an investor in foreclosure (blanket receiverships are not used for owner-occupied units).

  • Whether a relative or friend of the investor, a non-rent paying tenant could be ordered by Heller to pay fair market rent to be turned over to the association. The Orlando order also now allows receivers to collect rent the moment an investor is delinquent, no 30 or 60 day late notices from the association necessary. And the order specifically reminds tenants that they could face jail and contempt of court charges for not complying with a receiver's order and not appearing in court to explain why.
For the story, see Condo associations turn to receivers to fight deadbeat investors (New weapon in the fight against delinquent owners).

Sunday, September 13, 2009

Wells Fargo Exec Spotted Squatting, Throwing Lavish Bashes At Lender-Owned, $12M Oceanfront REO Once Owned By Madoff Victims, Say Neighbors

In Malibu, California, The Los Angeles Times reports:
  • Bernard L. Madoff's massive fraud stunned some of the wealthy denizens of Malibu Colony, especially when a couple devastated by the scheme surrendered their oceanfront home to Wells Fargo Bank. But some neighbors say the real shocker came when they saw one of the bank's top executives spending weekends in the $12-million beach house and hosting eye-catching parties there.

  • What's more, Wells Fargo spurned offers to show the property to prospective buyers, a real estate agent said. "It's outrageous to take over a property like that, not make it available and then put someone from the bank in it," said Phillip Roman, an 18-year Colony resident who lives a few homes away from the property. Residents identified the house's occupant as Cheronda Guyton, a Wells Fargo senior vice president who is responsible for foreclosed commercial properties.

For more, see Wells Fargo exec used Malibu Colony home lost by Madoff-duped couple, neighbors say (A top bank executive was seen spending weekends and hosting parties in the $12-million beach house. The bank says it will 'conduct a thorough investigation of the allegations' by neighbors) (if link expires, try here).

For story update, see The Wall Street Journal's Deal Journal Blog: Wells Fargo Responds to Malibu Foreclosure Flap (Wells Fargo released a statement responding to the escalating flap over allegations that one of its senior executives was partying in a $12 million Malibu pad that the bank had taken from a struggling home owner).

Lender Erroneously Forecloses On Home Earlier Sold In Short Sale; Soon-To-Be-Married Couple Say Thieves Took Wedding Gifts, Leave Behind Beer Cans

In Novi, Michigan, WDIV-TV Channel 4 reports:
  • A metro Detroit couple set to be married in nine days said the house they purchased is now at the center of police investigation because of a foreclosure mixup. And to top it off, thieves broke into the house and stole thousands of dollars in wedding gifts.

  • Rachel Kozma, 24, and her fiancé purchased the Novi house in late August through a short sale. But the Dunbarton Pines subdivision house was apparently never taken off the foreclosure list. Kozma said she and her fiancé started doing improvements to house like painting and new tile. When she returned Wednesday to the house she found a notice on the front door stating the home had been winterized as part of the foreclosure process.

  • Kozma said she went around the house and noticed that several items were missing, including several wedding gifts and even her wedding band. Kozma said she even found beer cans, cigarette butts and chicken bones that the thieves had allegedly left behind.

For more, see Wedding Gifts Stolen From Novi House (Couple Says House Involved In Foreclosure Mixup).

Judge Allows Prosecution Of California Man Accused Of Using Forged Deed To Steal Home To Continue

In Santa Cruz, California, the San Jose Mercury News reports:
  • A man accused of taking ownership of a home that wasn't his knew the real story behind the Ben Lomond property when he moved in this spring, according to testimony in court Tuesday. The computer of Daniel Judd, formerly of Saratoga, contained records identifying the property's legitimate owner as Pleasanton couple Tom Decker and Maria McArthur, an inspector with the District Attorney's Office testified. The computer also contained what is thought to be a forged deed granting ownership to Judd, according to the inspector.

***

  • Santa Cruz County Superior Court Judge Paul Marigonda ruled [...] there was sufficient evidence for prosecutors to proceed with three felony charges against Judd. The counts involve the falsification of documents in connection with an alleged scheme to take possession of the Santa Cruz Mountains home.(1)

  • The case came to light when Decker and McArthur, who bought the three-bedroom Hubbard Gulch Drive house in 2007 as a place to retire, returned from a vacation in April to find their locks re-keyed, their furniture moved to the garage and Judd living there.

For the story, see Attorney: Computer records suggest Judd's involvement in Ben Lomond home heist.

(1) Reportedly, Judd's attorney maintained his client's innocence. According to Ken Azevedo, Judd bought the home in early April from another man, Santa Cruz resident Ray Tate, unaware that Tate did not have a legitimate claim to the property. Tate, too, faces charges of forgery as well as illegally obtaining property. DeedContraTheft

Water Shutoff, Deteriorating Conditions In Central Florida Apartment Complex Facing Foreclosure May Force Tenants Onto Street

In New Smyrna Beach, Florida, the Daytona Beach News Journal reports:
  • With only a trickle of water coming from their faucets, tenants of a Wayne Avenue apartment complex find themselves drowning in a sea of foreclosure red tape and unpaid water bills. As sprinklers rain H2O onto the golf course across the street from their residence [...], Melvin Brown and his son depend on drips to fill buckets they use to flush their toilets or take a sponge bath after the city's Utilities Commission turned off their water Aug. 24 because their landlord didn't pay the bill.

***

  • Property owner Robert Fiorenzi said he is as much of a victim of circumstance as his tenants. "Being in foreclosure I am losing money and cannot cover my bills," the New Smyrna Beach resident said. [...] The utility insist[s ...] he pay the entire $5,400 due for July, as well as late fees, penalties and surety bond payments, which total almost $8,300, according to Utilities Commission records.(1)

***

  • When the issue came to the attention of Mayor Sally Mackay, she pleaded with her fellow city commissioners to intervene, something they weren't willing to do. [...] Mackay said she didn't want the situation to deteriorate to a point where residents will have to be put out of their apartments because of health concerns.

For the story, see Tenants left dry over unpaid water bill.

(1) According to a Utilities Commission e-mail, 20 of the 45 apartments in the multifamily complex are occupied, although landlord Robert Fiorenzi said the figure is closer to 10, according to the story. Because a single water meter -- billed to the landlord -- serves the complex, renters are left dry because they aren't able to pay their bills individually.

"Grave-Robbing" Florida Man Used Forged Deed To Steal Dead Man's Home, Say Cops

In Panama City, Florida, The News Herald reports:
  • Police arrested Timothy James Benson, 52, on one count of forgery, one count of uttering a forged instrument and grand theft. The arrest stems from an investigation into the theft of a parcel of property and the house on that parcel, according to a news release from the Panama City Police Department.

  • On March 13, Benson forged a deed for the property located at 2705 E. First Court, police said. On March 20, he presented the forged document to the Bay County Clerk of Courts as a true and legal document to obtain the property. The rightful owner of the property died on July 14, 2008, and could not have signed the document on March 13, police said.

Source: Police: Man forged deed, dead owner's signature. DeedContraTheft

Saturday, September 12, 2009

Seattle-Area Man Faces Multiple Charges Of Pocketing Tenant Deposits From Would-Be Renters On Homes Belonging To Others

In King County, Washington, The Seattle Times reports:
  • Paul Bakovich, who was arrested last month after authorities said he took nearly $4,300 in deposits from seven people he allegedly scammed into believing he owned rental properties, has been arrested again -- for allegedly using the same ruse. Bakovich was charged on Sept. 2 with four counts of second-degree theft in the most recent incident. He was already facing three counts of second-degree theft filed on Aug. 26.

  • Bakovich, 36, was arrested on Aug. 22 for fraudulently claiming to be a landlord and taking thousands of dollars in deposits from would-be renters, according to charging papers. He wasn't caught until one potential renter looked his name up on the Internet and found warnings from other people who had been scammed. But by that point the renter, a woman who was interested in a Redmond home, was out $900.(1) Soon after bailing out of jail on Aug. 27, Bakovich alleged tried to collect money from another person interested in the Redmond home, according to charging papers filed in King County Superior Court. [...] Bakovich is now being held at the King County Jail on $60,000 bail.

For more, see Alleged phony landlord in trouble again.

(1) Reportedly, the woman met Bakovich after seeing a Craigslist ad for a three-bedroom house in Redmond for $885 per month. The house was in foreclosure and was never owned by Bakovich. KappaPhonyLandlordScam

Arizona Vendor Of Items Stripped From Foreclosed Homes Faces Sentencing This Month; Used Craigslist, Consignment Shop, Estate Sales To Unload Goods

In Fountain Hills, Arizona, The Arizona Republic reports:
  • A Fountain Hills man will be sentenced later this month for stripping foreclosed homes of their appliances, a crime which officials say is rapidly on the rise. Mark Sydnor, 54, was a middleman in the sale of items from foreclosed homes, according to a fraud task force investigating that and similar crimes. He sold anything that could be knocked out of the home - like cabinets, counters, doors - and would sell them on Craigslist, on online sales site. Whatever Sydnor couldn't sell over Craigslist he would sell at his consignment shop - also in Fountain Hills - or in estate sales, authorities said, keeping keep 25% of the profit and giving the rest to the owners of the home.

For more, see Fountain Hills man in appliance thefts to be sentenced. foreclosure fixture stripping apple foreclosure stripping

Housing Discrimination Based On Race, National Origin, Familial Status All On Massachusetts AG Radar

From the Office of the Massachusetts Attorney General:
  • Attorney General Martha Coakley’s Office filed a housing discrimination complaint against two Somerville property owners for allegedly refusing to rent an apartment to a prospective tenant and his family on the basis of their race and national origin. The complaint [...] alleges that Jardelina and Olivero Costa of Somerville violated state anti-discrimination and consumer protection laws by refusing to rent to a prospective tenant and his family because they are of Indian national origin. [...] The complaint alleges that in September 2008, the prospective tenant and his cousin inquired at a local real estate company about a Somerville apartment, owned by the Costas, advertised for rent on the Internet. After viewing the apartment with the real estate agent, the prospective tenant returned to the real estate office to provide the deposit required by the owners to secure the rental property. The complaint alleges that at this time the real estate agent relayed a conversation she had with the Costas, in which they told the agent that they did not want to rent to the family because they were of Indian national origin and “their food stinks.”

For the AG's press release, see AG Coakley Files Suit Against Somerville Property Owners in Housing Discrimination Case.

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  • Attorney General Martha Coakley’s Office reached a settlement with a Dedham real estate company and one of its employees, resolving allegations that they unfairly discriminated against a prospective homebuyer, causing her proposed home purchase not to go forward. The Assurance of Discontinuance [...] against Discover Real Estate Corporation and its employee, Virginia E. Bethoney, alleges that the company and the employee violated state anti-discrimination laws by denying an African-American woman the opportunity to negotiate the purchase of a home in Dedham. “It is against the law to deny someone the opportunity to purchase a home because of their race,” said Attorney General Martha Coakley. [...] According to the allegations in the prospective buyer’s complaint filed with the Massachusetts Commission Against Discrimination, the real estate company failed to communicate the seller's response to the prospective buyer's offer and refused to negotiate with the prospective buyer's broker. Under Massachusetts law, it is illegal to refuse to negotiate the sale of property with a person due to the person’s race.

In addition to other sanctions contained in the settlement, the alleged violator agreed to pay the victim $2,500 in damages.

For the AG's press release, see AG Coakley Reaches Settlement with Dedham Real Estate Company Resolving Allegations of Unlawful Real Estate Broker Practices.

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  • Attorney General Martha Coakley’s office obtained a consent judgment against ABG Residential, a Cambridge-based realty company, and its agent, Georgina Zala, resolving claims that the company refused to rent an apartment to a couple because they had a nine-month old child whose presence would require abatement of lead paint hazards under state law. The consent judgment [...] orders the defendants to pay $3,500 to the couple and bars the defendants from future acts of discrimination. [...] It is illegal [in Massachusetts] to discriminate against families with children in order to avoid compliance with the lead paint law.

For the AG's press release, see AG Coakley Settles with Cambridge Real Estate Company That Discriminated Against Family with Young Child.

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  • Attorney General Martha Coakley’s Office has filed a lawsuit against Cornerstone Corporation, a for-profit property management company that manages the Roxse Homes residential housing development in Boston, alleging that the company and one of its employees discriminated against a tenant because she is a foster parent. Under state and federal law, it is illegal to discriminate against a person based on his or her familial status which can include foster parent relationships. “It is a violation of state and federal law to discriminate against foster parents because of the familial status or composition of their family,” said Attorney General Coakley. “Foster parents serve a critical need in supporting the care, welfare and safety of children across the Commonwealth.”

  • According to the complaint, the tenant had been a licensed foster parent for the Massachusetts Department of Children and Families for many years and had lived in Roxse Homes with her family, including foster children, since 2006. The complaint alleges that despite knowing that the tenant was a licensed foster parent, the defendants falsely accused the tenant of operating a day-care center in her apartment in violation of the lease and later twice threatened to evict her and her family unless she ceased such activity.

For the AG's press release, see AG Coakley Sues Boston Property Management Company and its Manager for Discrimination Against Foster Parent.

Florida AG, Developer Settle Civil Rights Allegations Of Violating State Fair Housing Act Accessibility Standards

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum [...] announced that his office has obtained a settlement for a Central Florida couple resolving allegations of civil rights violations related to their condominium. Under the settlement, Brevard County developer Tricon Development Corporation paid $15,000 in civil damages to Josephine and Dominic DeRusso, which included the cost of retrofitting the couple’s home. [...] The lawsuit alleged that Tricon had failed to meet the Florida Fair Housing Act’s accessibility standards when it developed the DeRusso’s condominium in Indiatlantic, Florida. Mrs. DeRusso is disabled and needed her home and certain common areas made accessible.

***

  • The DeRussos asked the Attorney General to file the lawsuit to enforce the provisions of the Fair Housing Act following an investigation and reasonable cause determination by the Florida Commission on Human Relations. In addition to paying civil damages to the DeRussos and retrofitting their home, Tricon will make several modifications to the common areas at Topaz Oceanfront Condominium. The modifications include installing grab bars in the appropriate locations at the pool area and adapting the threshold at a door connecting the pool area and the pool restrooms.

For the Florida AG press release, see McCollum Obtains Civil Rights Settlement for Central Florida Couple.

Home-Based Meth Labs A Threat To Health & Pocketbook

From the Rim Country of Central Arizona, The Payson Roundup reports:
  • Health and law enforcement officials across the country are becoming increasingly alarmed at the number of homes being sold that were once used as meth houses or laboratories. The problem developing is that former homes where meth was either used or manufactured are in fact health hazards to anyone currently residing in them due to the residual poisons that were soaked into the walls, window treatments and flooring.(1)

***

  • In 2005, nearly 17,000 homes were seized by authorities (many ending up in foreclosure) and unknown to those subsequently purchasing these homes, the families inhabiting them are exposed to the dangers of the toxic chemical waste left behind. While at this time there are no federal guidelines for cleanup of these materials, in 12 states (Arizona included), it is illegal to occupy a dwelling before it’s been decontaminated. However, in most states there are few protections in place.

  • Fourteen states (including Arizona) require property owners to disclose if the property offered was a former drug house and 13 states (Arizona being one of them) have actually established a guideline for cleanup. The cost of cleaning and decontaminating a former meth lab is astronomical. It can cost anywhere from $30,000 to $100,000 to complete. Unfortunately, with no federal assistance in place, the price tag is up to the property owner to absorb.

  • Right now there are literally tens of thousands of contaminated residences across the United States. Living in one of these former drug houses can very easily cause a family to face financial ruin between having to pay for any possible cleanup, developing health-related illnesses and having to throw away any personal possessions that can’t be cleaned. Add to that the cost of acquiring another residence and then moving. It is a nationwide nightmare.

For the story, see Meth houses need to be decontaminated.

In a related story, see The National Law Journal: Meth Lab Residue in Homes Triggers Litigation (Lawsuits over contaminated homes focus on failure to disclose issue).

(1) Reportedly, for every pound of meth that is cooked in a home, five to seven pounds of chemical waste products are created. From this waste, a variety of long term health problems can occur including but not limited to: headaches, blisters, damaged lungs, liver or kidneys. meth lab yak

Friday, September 11, 2009

"Zombie Debt" Buyers Now Required To Produce Documentation Tracing Their Ownership As Part Of Collection Lawsuits Brought In NC Under New State Law

In Raleigh, North Carolina, the Asheville Citizen Times reports:
  • Companies that buy up unpaid debt and pressure consumers to pay it off are being targeted under a new state law that requires them to prove the people they're chasing actually owe them money. Supporters say the regulations appear to be the first in the nation to target debt buyers.

***

  • Advocates who pushed for the regulations on debt buyers say the collectors scare consumers into paying up, even if the debt has been paid or a statute of limitations for collection has expired. “These people would send them money, and they’d never mark the debt paid, and they’d sell it to somebody else,” said state Sen. Martin Nesbitt, D-Buncombe, “and lo and behold, here they’d come again.”

  • In other cases, the collectors simply pursue the wrong person, Attorney General Roy Cooper said. Cooper said a worsening economy has led more companies into the debt buying business, where they can pay pennies on the dollar to buy up debt that businesses like credit card companies have given up on collecting. They use “very aggressive tactics to try to collect this money,” he said.

  • The law requires documentation as part of any lawsuit tracing how the debt has changed hands. It mandates 30 days written notice before a lawsuit. When debt buyers receive a payment, they must issue a detailed receipt. Violators can face fines up to $4,000.

For the story, see NC cracks down on debt buyers. zombie debt zeta

Title Agent Gets 7 Years For Looting $3.4M From Escrow; Used Phony Docs, "Ponzi" Approach To Conceal Scam Involving 16 Properties With Unpaid Liens

From the Office of the U.S. Attorney (Baltimore, Maryland):
  • U.S. District Judge Catherine C. Blake sentenced Deborah Williams, age 57, of Pasadena, Maryland, the owner of [Day Title, Inc.,] a Severna Park title company, [...] to 84 months in prison followed by two years of supervised release for mail fraud related to a scheme to divert settlement funds to her own benefit, [...].

***

  • According to her plea agreement, [...] Williams used for her own benefit settlement funds from real estate closings that were deposited in Day Title’s escrow account and were intended to pay off the lien holders on those properties. [...] Williams attempted to conceal her illegal transactions by falsely representing on the settlement documents that her company had paid off lien holders, [...] In fact, Williams either initiated stop payments of payoff checks that had been disbursed or intentionally failed to mail the payoff checks to the lien holder.

  • Day Title’s failure to make the payoffs to the lien holders was not detected until sellers began receiving delinquency notices from their mortgage companies. The time delay between the settlement and the date when Day Title made the payoffs to the lien holders allowed Williams to replenish the escrow account with proceeds from new unrelated real estate settlements.

  • A title insurance company that had issued policies through Day Title began to receive claims from lien holders who had not been paid off and conducted an audit of Day Title. The title insurance company found over 16 properties where Williams had not paid off the lien holder. The company paid out a total of $3.443 million to these entities, as required under the title insurance policies that guaranteed that the buyer was receiving a title free of prior liens.

For the U.S. Attorney press release, see Pasadena Title Company Owner Sentenced to over 7 Years in Prison for Defrauding Lenders of over $3.4 Million (Diverted Real Estate Proceeds to Personal Use and Created False Settlement Documents). EscrowRipOffKappa

Connecticut Woman Charged With Ripping Off Her 89-Year Old Mother Of Home, Cash

In Ansonia, Connecticut, WTNH-TV Channel 8 reports:
  • An Ansonia woman was arrested [last week] for allegedly violating the court-ordered fiduciary duties for her 89-year-old mother. Donna D. Kingston, 61, allegedly withdrew more than $72,000 by closing a CD account and withdrawing funds from her mother's bank account in May and June 2007. Less than $4,500 was left in the bank account, the warrant states.

  • In May 2008, Ms. Kingston quit-claimed full ownership of her mother's Ansonia home to herself. Although the deed allowed the mother life use of the property, she has repeatedly demanded the return of her home and assets without result. Kingston was charged with three counts of larceny.

Source: Woman accused of stealing from mother. DeedContraTheft FinancialAbuseOfElderlyAlpha

Ailing Senior Loses Home To Foreclosure Despite Paying $3K To Foreclosure Rescue Operator To Resolve Mortgage Problem

In Tauranga, New Zealand, The New Zealand Herald reports:
  • An ailing retired man has lost his home of 22 years and thousands of dollars after agreeing to have his mortgage handled by a supposed charitable trust. [... Don Clark, 65,] first fell into debt after a vicious assault in 2006 left him with serious head injuries and impaired vision. He was unable to work for 18 months. Still suffering from chronic headaches two years later, he tried to resolve his escalating mortgage problem to reduce the stress on his health.

  • A friend recommended Hamilton-based group Home Rescue, which offers help to homeowners who have lost their income or are facing foreclosure from the bank. [...] But despite paying the group $3000, his finance company Liberty Financial took him to court in July, and repossessed the house he had been living in since 1987. Home Rescue did not return his calls. The trust, which he gave power of attorney for his house, did not appear for him in court, and his property was forfeited.

For more, see Ill man blames charitable trust for losing home.

See also, Bay of Plenty Times: Bashing victim loses house.

Foreclosure Flood Means Brisk Business For Phoenix-Area "Home Strippers" - Craigslist A Favored Outlet For Unloading Loot

In Phoenix, Arizona, The Arizona Republic reports on the recent rash of "foreclosure stripping" incidents taking place in the area:
  • Julie Halferty, a special agent who oversees the Phoenix FBI Mortgage Fraud Task Force, said no one knows exactly how many foreclosed houses in the Valley have been stripped by former owners, neighbors or strangers. Those who work in real estate believe the number is in the thousands. "Without question, probably 85 to 90 percent of houses on the market under $200,000 have been stripped," said Tempe real-estate agent Kim Baker. "Appliances are the most commonly poached item, but plumbing fixtures and faucets, ceiling fans, light fixtures, water heaters and air-conditioning units are fair game" in the eyes of the strippers, she said. Halferty said she and her fellow FBI agents "haven't been able to quantify it, but we know it is rampant."

***

  • "Take a look at Craigslist," [one real estate agent] said. "It's full of things that have been stripped out of houses." Halferty said Craigslist.org tipped the fraud task force to the extent of the problem. "It is so blatant," Halferty said. "People would advertise that they were selling cabinets in a foreclosure sale."

For the story, see Theft of fixtures becomes major risk in foreclosures.

Thursday, September 10, 2009

Deadbeat Landlord/Condo Converter Ordered To Turn Over Title To 15 Units After Pocketing Rent, Stiffing Association Out Of $175K In Maintenance Fees

In Miami, Florida, The Miami Herald reports:
  • A South Florida condominium converter who was renting out units but ducking his maintenance fees has been ordered to turn over ownership of 15 units to the condo association, plus rent checks that had been improperly collected. Facing possible jail time for contempt of court, developer Robert Wolfarth, the managing member of the Village at Dadeland Associates, agreed to hand over title to the units in about 90 days. He also was ordered to pay the association $11,700 in rent owed under a blanket receivership established in June.(1) [...] Once the condo association gets possession of the units, it plans to continue renting them out and using the money to pay off Wolfarth's old debts -- that is until Wolfarth's mortgage lender comes calling.

Reportedly, Wolfarth was collecting rents from his units while dodging more than $175,000 in maintenance fees.

For more, see Condo converter ordered to turn over 15 units to association (A condo converter must turn over 15 units to the condo association because he failed to follow a court order).

In a related story, see Condo associations turn to receivers to fight deadbeat investors (Condo associations across South Florida and the state are increasingly turning to court receivers - appointed by a county circuit court judge to collect rents and profits of lands involved in a dispute - to save them from deadbeat investor owners.).

(1) Under a blanket receivership, a judge appoints a single custodian to collect rents from all tenants living in units subject to foreclosure by a condo association. Such receiverships are a relatively new legal tool being used by associations to collect maintenance fees. The order against Wolfarth, issued Aug. 27, demonstrates how effectively they can be used, said attorneys representing the Village at Dadeland Condo Association.

Upstate NY Couple Charged In Alleged "Shotgunning" Mortgage Fraud Scam As Multiple First Mortgages Are Obtained On Same Properties

In Saratoga Springs, New York, The Business Review reports:
  • A Saratoga Springs couple is accused of stealing $2.5 million from several banks in a mortgage scheme in which they obtained multiple first mortgages on six properties they bought more than two years ago. Stephen Sutliff, 37, and his wife Nikole Sutliff, 32, [...] were [...] charged with nine counts each of grand larceny and one count each of conspiracy in Saratoga County Court, according to the Albany County District Attorney’s office which is prosecuting the case.

  • Financial Crimes Bureau Chief Chris Baynes said he has never seen a scheme involving so many properties and so many mortgages obtained on the same day. Baynes said the Sutliffs legally closed on four Saratoga Springs properties on March 27, 2007, and later that day obtained between seven and eight mortgages worth $250,000 to $300,000 apiece.

  • According to prosecutors, Nikole Sutliff allegedly acted as a mortgage broker and worked in concert with a third party who acted as the settlement company representing several banks. Baynes said the Saratoga County resident who worked in conjunction with the Sutliffs is expected to be charged at a later date. All of the banks were operating under the understanding that they were issuing first mortgages and held the primary position in securing the home, Baynes said. The Sutliffs also allegedly carried out the same scheme a few weeks earlier when they closed on two other Saratoga Springs properties, Baynes said.

For the story, see Saratoga couple accused in $2.5 million mortgage scheme.

200+ Poor Tenants Face The Boot As Lender Threatens Foreclosure Of Mold-Infested Complex; Failed Inspections Could Result In Rent Subsidy Cut-Off

In Daytona Beach, Florida, the Daytona Beach News Journal reports:
  • For the past few years, some residents of the Daytona Village Apartments say mold has mushroomed on their walls and ceilings, their homes have been invaded by cockroaches and spiders, and their refrigerators have conked out and not been replaced. Now some of the roughly 230 tenants could find themselves homeless in a few weeks. Unless a new owner comes along pretty quickly and makes repairs, federal rent subsidies could be cut off at the Keech Street apartments.

***

  • The complex has failed recent U.S. Housing and Urban Development inspections, and the man who has owned the property since 2006 was under a contract to keep the property in better condition to continue receiving roughly $30,000 every month in rental assistance, officials said.

***

  • At a hearing Tuesday in circuit court, an attorney for the bank that handled [landlord Surujnauth "Oscar"] Bharrat's loan said there's a tentative agreement on the table for the deed in lieu of foreclosure. That's according to Debbie Hallisky, a Community Legal Services attorney helping tenants. [...] "According to the bank, there has been a potential settlement and the owner has agreed to sign over the property to the bank," she said.

For more, see Apartments' disrepair may force evictions. RentSigmaSkimming

Student Film Documentary On Subprime Crisis Results In Legal Threats From Brooklyn Developer

In Brooklyn, New York, The New York Times reports on three Hunter College students, a film documentary called "Subprimed" that they are working on that reportedly exposes the exploitation that lies behind much of the foreclosure and subprime crisis in Brooklyn, and a local real estate development company that has its owners, brothers Michael and Joseph Makhani, pretty ticked off. The story highlights 14 residents on two streets in East New York who were in danger of losing their homes, and who had all bought the properties from them.(1)

For the story, see Student Filmmakers, Not Ceasing or Desisting.

(1) Being the target of bad publicity is apparently not new for the brothers. Reportedly, both Makhani brothers pleaded guilty in federal court in 1999 to taking part in a scheme involving foreclosed properties in Queens; they were fined and sentenced to three months in prison. And last December, their company, HPD, LLC and two other companies in which Joseph Makhani is a principal pleaded guilty to filing false deeds as part of a housing scam in Queens. The companies were fined $5,000 each.

Wednesday, September 09, 2009

Texas Homeowner: Updated Flood-Plain Maps, Retroactively Charged Force-Placed Insurance Leave Me Facing Foreclosure

In Waco, Texas, the Waco Tribune Herald reports:
  • The Federal Emergency Management Agency’s policy requiring flood insurance in flood plains is meant to protect life and property. But in East Waco, it may cost a single mom her home. Charrie Rollins, 36, is facing foreclosure on the $81,000 brick home she bought three years ago [...]. She says she has fallen behind on her payments because she can’t afford the flood insurance her lender began requiring after FEMA determined last summer that her home was in a flood plain. FEMA last September reclassified the area [within which her home sits] to be in the 100-year flood plain, which means it has a 1 percent chance of flooding in a given year. The area [...] includes more than 30 small homes as well as Toliver Chapel Baptist Church.

***

  • Rollins said that requirement set in motion a vicious cycle that has left her $2,600 behind on her payments to her mortgage company, even though she has continued to pay her customary principal and interest payment of $459 a month.

***

  • Rollins said that after learning she was in a flood plain she attempted to get private flood insurance but did not have it as of May.(1) That month, Rollins’ mortgage company created an escrow and force-placed the flood insurance policy on her at a rate of $158 a month, her paperwork shows. [...] Rollins’ lender, American Home Mortgage Servicing Inc., of Irving, Texas, could not be reached to verify her claims that she was retroactively charged for flood insurance.

***

  • [Local NeighborWorks' housing counselor Reuben] Andrade said Rollins’ situation is a “strange case,” but other mortgage holders may be affected too. “It’s really been a hassle and a mess,” he said. “In all honesty, I wouldn’t be surprised if there are others who still have mortgages who are accumulating debt from force-placed insurance.”

For more, see Waco woman may lose home after FEMA rules she lives in a flood plain.

In a related story, see KXXV-TV Channel 25: East Waco homes under new flood plane; FEMA says way to lower costs of insurance (A dramatic change could put Waco homeowners at risk of foreclosure. F.E.M.A has redesigned their flood plane, which now effects many homes in East Waco, adding extra monthly costs of flood insurance.).

(1) Rollins was urged to purchase her own flood insurance policy, which she was told costs about a third as much as the force-placed insurance. But she said no local companies will sell her the insurance without getting an engineer to study the house and write a certificate of elevation, which costs about $600. County Commissioner Lester Gibson, who heard about Rollins’ plight from a pastor, raised the funds for the certificate at a recent meeting of his weekly public-affairs forum. Last week, she hired the engineer and is waiting for the certificate.

Title To Landmark Minneapolis Mansion Stolen By Forged Deed, Say Owners

In Minneapolis, Minnesota, the Star Tribune reports on claims that someone has tried to steal the title to the Van Dusen mansion, a 117-year-old landmark on LaSalle Avenue which resembles a Gothic castle with its thick, pink limestone walls, from its current owners. The owners allege that their signatures -- and the signature of the notary public that all appear on the warranty deed are forgeries.

For more, see Who owns the Van Dusen mansion? (An investment adviser and his wife say someone forged signatures in an attempt to steal the Van Dusen mansion).

Ohio Woman Concerned Over Claim Of Lien On Home For "Zombie" Debt That's Not Hers

In Batavia, Ohio, WKRC-TV Channel 12 reports:
  • A Batavia woman was surprised to receive a letter saying a lien was placed against her property, but doesn't know how to put a stop to it. Beverly Townsend received such a letter in July from a Columbus lawyer. It says a lien has been placed against her real estate as a result of a 16 year old debt. She says the debt is not hers and she's worried. "I'm just concerned that they could possibly garnish my wages, interfere if I had to refinance my house. I'm not planning to, but you never know in this economy, and that could throw that all off," says Townsend.

  • The notice that upset her was this letter saying a judgment lien was filed on her real estate and is subject to foreclosure. Beverly's daughter, Tanya, says the person who owes the debt is not her mother. "A debt owed to Abbott Foods for a restaurant she owned in Middletown. She's never owned a restaurant. She's never lived in Middletown," says Tanya.

***

  • Beverly Townsend is clearly not the debtor named in the judgment, but her name will remain on the books. When she refinances or sells her home, she will simply have to fill out what's called a "not me" affidavit(1) stating she's not the person named in the judgment.

For more, see Batavia Woman Finds Lien Wrongly Placed On Her Home.

(1) Go here for more on judgment, or "not me," affidavits. zombie debt zeta

Unlawful Use Of POA To Get Reverse Mortgage On 90-Year Old Mom's Home Among Charges Facing Clemson Councilwoman

In Clemson, South Carolina, the Greenville News reports:
  • A Clemson city councilwoman was arrested [...] and charged with several counts of fraud in what authorities allege was a scheme to solicit money to pay for her daughter's legal troubles by claiming in part that her daughter had cancer. Elouise James, 66, [...] was charged in Greenville and Pickens counties with two counts of forgery, two counts of obtaining goods by false pretenses and one count each of obstruction of justice and financial exploitation of an adult, according to arrest warrants.

***

  • [13th Circuit Solicitor Bob] Ariail said that in an effort to help her daughter avoid legal problems, James “misrepresented that her daughter had cancer and collected money on her daughter's behalf, forged a statement from the Cancer Centers of the Carolinas to avoid her daughter's prosecution … and used her power of attorney to obtain a reverse mortgage on her mother's home in order to pay restitution and probation fees for her daughter.”(1)

For the story, see Clemson councilwoman Elouise James faces fraud charges.

(1) Reportedly, a warrant charges that James unlawfully used power of attorney in relation to her 90-year-old mother to take out a reverse mortgage on her mother's home and used the $15,000 from the mortgage to pay her daughter's restitution balance a few days before a probation revocation hearing.