Thursday, December 10, 2009

Philly Feds: Two Lawyers Among Five Who Ran Bogus Sale Leaseback, Equity Stripping Racket Clipping 35 Homeowners Of $14.6M; Civil Suit Pending

In Philadelphia, Pennsylvania, The Intelligencer reports:
  • Doylestown Township Supervisor Jeffrey Bennett and his law partner, Stephen Doherty, were indicted in U.S. District Court Tuesday for reportedly skimming equity from the homes of owners facing foreclosure in a mortgage fraud scheme.(1) The 15-count indictment accuses the attorneys at Doylestown Township's Bennett & Doherty, P.C., plus three others of conspiring to obtain fraudulent mortgages totaling $14.6 million for at least 35 struggling homeowners. The mortgages funded a scheme that generated cash for the defendants but often cost victims their homes, according to the indictment.

***

  • Bennett, Doherty and the McCuskers were previously named in a Bucks County civil suit brought by 11 homeowners who claimed to have been swindled out of houses they owned in Haycock, Hilltown, Newtown Township, Plumstead, Richland, Solebury and other towns. The homeowners' attorney - Stuart Eisenberg of Warminster's McCullough & Eisenberg PC - said he hadn't read the indictment Tuesday afternoon, but he hopes his civil case will be able to continue in light of the criminal charges. "This has been going on for too long for my clients," Eisenberg said. "I need to push forward. My clients have been terribly hurt."(2)

***

  • The criminal indictment claims the scheme [...] included purchase and sales agreements with forged signatures, forged lease agreements, documents misstating the borrower's creditworthiness, and paperwork that failed to mention that the new owner was relying on the financially distressed former owners to pay part of the new mortgages.

For more, see Supervisor, law partner indicted in scheme (Fellow Doylestown Township supervisors called on Jeffrey Bennett to resign his post).

For the Federal indictment, see U.S. v. McCusker, et al.

(1) Also indicted were: Ed McCusker, who ran the now-defunct Axxium Mortgage Inc. of Upper Makefield; his wife, Jacqueline McCusker; and Mount Laurel mortgage broker John Alford Bariana. All five are charged with mail fraud, wire fraud and conspiracy to commit money laundering, according to the indictment. Doherty also is charged with bankruptcy fraud. The defendants will be formally notified of the charges against them later this week, and U.S. Attorney Michael L. Levy said he expects them to voluntarily appear for processing, the story states.

(2) For an earlier Intelligencer story on the civil case filed against this alleged foreclosure rescue racket, see Suit claims 9 are victims of mortgage scheme. foreclosure rescue

Vegas Class Action Seeks To Stop BofA Foreclosures; Cites Lender's Lack Of Good Faith Negotiations In Loan Mods, Despite Grabbing Gov't TARP Cash

In Las Vegas, Nevada, KVBC-TV Channel 3 reports:
  • As more homeowners find they aren't having any luck trying to work with their lenders, one local attorney is filing suit against one of the largest lenders of all: Bank of America. [...] The suit was filed on behalf of homeowners facing foreclosure who say there has been no progress made with regard to negotiations with their lender. And, as the president has discussed, there are actual laws in the books requiring lenders to negotiate with homeowners.

  • However, throughout Southern Nevada, many insist it's simply not happening. "And that's why what we're calling for in this lawsuit," explains attorney Matthew Q. Callister. "(It) is an automatic stay of any further Bank of America foreclosures until such time as every Southern Nevadan avails himself of his right under federal law to have that fundamental 'good faith' negotiation."(1)

For more, see Local attorney files suit against Bank of America.

(1) According to the story, the class-action suit against Bank of America represents about 30 people so far; it alleges that the bank has failed to act in accordance with a section of the government's Making Home Affordable program, saying the lender has "refused to evaluate loans" and "failed to suspend foreclosure proceedings." Callister says Bank of America accepted TARP funds and now refuses to do what was required as part of the acceptance. loan modification

Wells Fargo Farm Foreclosure Leaves 100+ Thirsty, Unfed Animals In Limbo After Owner Gets Boot

In Glocester, Rhode Island, The Providence Journal reports:
  • The evicted owner of Bonniedale Farms, upset with the way 136 animals on his farm have been treated since he was forced off the property Monday by Wells Fargo Bank, plans to go before a Superior Court judge [...] to get a restraining order to force the bank or its agents to provide food, water and care for the animals left behind.

***

  • [T]he lawyer [for evicted owner Dan MacKenzie] said [McKenzie's] main concern was for the animals — including cats, dogs, chickens, pigs, horses, sheep, goats and others — that he said had been left to fend for themselves despite assurances by Wells Fargo that it had arranged to have the Rhode Island Society for Prevention of Cruelty to Animals take care of them. Tuesday, RISPCA president Dr. Ernest Finocchio confirmed some of MacKenzie’s fears, saying that the bank said it didn’t want the organization’s help. When he visited the site Tuesday, he said that at least some of the animals — eight horses and two 800-pound pigs — had not been given any water even though he had been told that they had.

For more, see Glocester farmer, evicted in foreclosure, seeks to compel care for animals.

See also, WBZ-TV Channel 38: Farm Foreclosure Leaves 150 Animals In Limbo.

For story update, see SPCA to direct care for Glocester farm animals:

  • After nearly an hour in a Superior Court judge's chambers Wednesday, lawyers for both sides in the eviction of Bonniedale Farm's former owner hammered out an agreement for how the farm's animals will be cared for in the next 24 hours. The agreement is for Dr. Ernest Finocchio, president of the Rhode Island Society for the Prevention of Cruelty to Animals, to examine the animals and determine the care they need. Lawyers for Wells Fargo Bank, which now owns the farm, and former owner Dan MacKenzie have agreed to abide by whatever Finocchio determines the animals need in the next 24 hours, lawyers for both sides said in open court after meeting with the judge.

Kansas AG Joins Nationwide "Operation Stolen Hope" - Tags Two Loan Modification Outfits With Suits Alleging Pocketing Upfront Fees, Breaking Promises

From the Office of the Kansas Attorney General:
  • [Kansas Attorney General Steve] Six recently filed two [...] lawsuits against [loan] modification companies. He alleges that these companies find consumers that are in trouble with their mortgage payments and contact them directly, either through internet advertisements or by phone. Despite promising to negotiate lower rates for the consumers, they either do nothing at all or provide services the consumers could obtain for no cost. The companies being sued are Home Loan Modification Advisors in California and Infinity Funding Group in New York.

For the Kansas AG press release, see AG Six continues fight to stop mortgage, foreclosure fraud.

Wednesday, December 09, 2009

MERS Takes Another Hit As Appellate Panel Affirms Bankruptcy Court Ruling That It Lacked Standing To Bring Foreclosure Action

In Las Vegas, Nevada, the Las Vegas Review Journal reports:
  • Homeowners struggling to avoid foreclosure got some good news [...]. U.S. District Judge Kent Dawson upheld a bankruptcy court ruling that makes it harder for lenders to foreclose on home mortgages. The case, heard by a panel of federal judges in November, concerned whether Mortgage Electronic Registration Systems Inc. could foreclose on residences on behalf of lenders.

  • The electronic system records the ownership of residential mortgages for the mortgage banking industry. Dawson said the company could not foreclose on a home, because it did not provide evidence that it held the note on the residence and didn’t show that it was an agent of the lender.(1)

For more, see Ruling may help homeowners trying to avoid foreclosure.

For Judge Dawson's ruling, see Mortgage Electronic Registration System, Inc. V. Chong, et al.

(1) According to the story, the case started in bankruptcy court two years ago. Mortgage Electronic Registration Systems Inc. was unable to show that it had possession of the note. On March 31, 2009, U.S. Bankruptcy Judge Linda B. Riegle ruled in bankruptcy trustee Lenard Schwartzer favor, saying the electronic system was not a “real party in interest” in the foreclosure action. The decision was appealed to federal court.

In his decision Tuesday affirming Riegle's ruling, U.S. District Judge Dawson (sitting in an appellate capacity) found that the Mortagage Electronic Registration must at least provide evidence that it was a representative of the mortgage loan holder, which it failed to do. “Since MERS provided no evidence that it was the agent or nominee for the current owner of the beneficial interest in the note, it has failed to meet its burden of establishing that it is a real party in interest with standing,” Dawson said, affirming the bankruptcy court ruling.

For a report on Judge Riegle's March 31 ruling in the bankruptcy court, see Las Vegas Business Press: Judge's ruling deals blow to national mortgage servicer. For Judge Riegle's ruling itself, see In re Mitchell. EpsilonMissingDocsMtg

Sentencing Wraps Up In "Money Store" Scam Prosecution; Bogus Sale Leasebacks Used To Strip Equity From Unwitting Homeowners Seeking Foreclosure Help

From the Office of the U.S. Attorney (Greenbelt, Maryland):
  • U.S. District Judge Roger W. Titus sentenced Jennifer McCall, age 48, the Chief Executive Officer of the Metropolitan Money Store, of Fort Washington, Maryland, to 135 months in prison, followed by five years of supervised release, for conspiracy to commit mail and wire fraud in connection with a mortgage fraud scheme that falsely promised to help homeowners facing foreclosure keep their homes and repair their damaged credit, [...].(1) Judge Titus also entered a judgement ordering McCall to pay restitution of $16,880,884.86. Judge Titus also sentenced co-conspirator Wilbur Ballesteros,(2) age 34, of Lanham, Maryland to 63 months in prison, followed by five years of supervised release and sentenced Ronald Aaron Chapman, Jr.,(3) age 35, of Washington, D.C., to seven days in prison, 10 months of home detention with electronic monitoring and five years of supervised release. Both men previously pleaded guilty to conspiracy to commit mail and wire fraud for their roles in the scheme. Judge Titus also entered judgements ordering that Ballesteros and Chapman pay restitution of $16,859,950 and $268,279.66, respectively.(4)

For the entire U.S. Attorney press release, see CEO of Metropolitan Money Store Sentenced to over 11 Years in Prison and Two Other Conspirators Sentenced in $37 Million Mortgage Fraud Scheme.

(1) McCall was originally scheduled for sentencing on November 16. That court date was marked by an incident in which her son, Raymond V. Jones, allegedly called federal prosecutor James Crowell a “coward” and “mother f*cker” and then threatened to kill him, before he jumped over the barrier dividing the gallery and the courtroom well and hit Crowell in the head, according to court documents. Crowell’s head was swollen after the alleged attack, the court records said. For a report on this incident, see MainJustice: Court Records: Man Punches, Threatens To Kill AUSA (requires free registration; alternatively, try here - then click link for the story). Read the criminal complaint against Jones here and a court motion, which describes his alleged attack on the federal prosecutor in greater detail, here.

(2) Ballesteros, a licensed real estate agent who served as a closing agent on more than 60 straw buyer properties, pocketed more than $100,000 in kickback payments to process real estate closings quickly, according to the U.S. Attorney's office.

(3) Chapman, hired to work as a loan officer, pocketed at least $66,000 in commissions that he was aware were probably the proceeds of fraud, but he deliberately avoided learning the truth as to the fraudulent nature of the funds, according to the U.S. Attorney's office.

(4) Ten defendants, including a lawyer, mortgage broker, real estate agent, loan processor and company officers have pleaded guilty in this scheme, according to the U.S. Attorney's office. In addition to the three defendants named above, the other seven are:

  • Joy Jackson, age 41, of Fort Washington, Maryland, and President of the Metropolitan Money Store - 151 months in prison;
  • Kurt Fordham (Jackson’s husband), age 39, of Fort Washington, Maryland - 10 years in prison;
  • Richard Allison, age 38, of Camp Springs, Maryland, an attorney - 18 months in prison;
  • Carlisha Dixon, age 32, of Hyattsville, Maryland - five months in prison and five months home detention;
  • Clifford McCall (Jennifer McCall’s husband), age 48, of Lanham, Maryland - four years in prison;
  • Chandra Jones (Jennifer McCall’s daughter), age 31, of Lanham, Maryland, - 33 months in prison;
  • Katisha Fordham (Kurt Fordham’s sister), 1 day in prison, followed by five months home detention and five months supervised release. foreclosure rescue equity stripping

Georgia Regulator Issues Cease & Desist Orders To Four Upfront Fee Loan Modification Companies

From the Georgia Department of Banking and Finance:
  • Georgia Banking Commissioner Robert Braswell [...] joined federal and state officials to crack down on loan modification and foreclosure relief scams, by the issuance of Cease and Desist Orders against individuals and companies who advertised unlicensed loan modification services to take hard-earned money from distressed Georgia homeowners.(1)

For the entire press release, see Georgia Cases Part of National 'Operation Stolen Hope'.

(1) The following firms were issued cease & desist orders, with links to the related press releases and C & D orders:

Illinois AG Lawsuits Targeting Alleged Loan Modification Fraud Operators Now Totals 31 With Three Recent Cases

From the Office of the Illinois Attorney General:
  • Attorney General Lisa Madigan [...] announced three lawsuits against mortgage rescue fraud schemes operating in Illinois as part of a national crackdown with the Federal Trade Commission (FTC) and the U.S. Department of Justice.(1) [...] With these new filings, Madigan has brought lawsuits against 31 mortgage rescue fraud schemes. To date, the Attorney General’s lawsuits have resulted in judgments in nine cases for more than $1.2 million in restitution for homeowners.

For the entire Illinois AG press release, see Madigan Continues To Crack Down On Mortgage Rescue Fraud (Illinois Attorney General Files Three New Lawsuits, Joins Federal Trade Commission, U.S. Department of Justice in Move to Protect At-Risk Homeowners Nationwide).

(1) Madigan filed complaints in Cook County Circuit Court against the following defendants:

  • Loan Mod One, LLC, which has offices in Las Vegas, Nev., and West Dundee, Ill.;
  • Freedom Mortgage Team, Inc., of Chicago, and Nevrus Mehmeti;
  • Living Modifications Corp., of Schaumburg, Ill., and its owner, Tomasz Tomczyk.

SF To Consider Expanding Rent Regulation Coverage To All Residences; Renting Out House To Tenant Could Become Iffy Proposition For Homeowners

In San Francisco, California, the San Francsico Chronicle reports:
  • San Francisco's Board of Supervisors is getting ready to vote on a proposal that would make it difficult and costly - in some cases, impossible - for property owners who have rented out their homes to move back into them.

  • At issue is a proposal by Supervisor John Avalos that would extend certain eviction protections to tenants living in residences built after 1979. Avalos and tenants' rights advocates characterize the proposal, which is expected to come up for a key committee hearing today, as a matter of fairness for tenants living in relatively modern buildings, which are not covered by the city's most stringent rent regulations. They suggest it could be particularly helpful to tenants in condominiums that are facing foreclosure.

For more, see Landlords could be locked out.

For story update, see S.F. tenants' victory likely to be short-lived:

  • Tenant advocates got a win at the San Francisco Board of Supervisors Tuesday with initial approval of a plan to extend eviction protections to rental housing built within the past 30 years - but the victory is expected to be short-lived. Mayor Gavin Newsom plans to veto the legislation, according to spokesman Joe Arellano, and the board, which voted 7-4, was one vote shy of securing a veto-proof majority.

(1) According to the story, the city's sweeping rent control laws of 1979 included provisions that allowed evictions only when a landlord could establish "just cause," which includes nonpayment of rent, illegal activity in the residence and other breaches of lease. Owners who want to move into their own homes must pay relocation benefits of $5,000 per adult tenant - and an additional $3,300 to households with children, the story states. Even then, a challenge to the landlord's "just cause" can reportedly add thousands of dollars in legal fees or settlement costs - or, if the tenant is elderly, disabled or catastrophically ill, he or she might not be able to be evicted at all. "In San Francisco, it's easier for a camel to pass through the eye of a needle than for a homeowner to move into his home," said Bart Murphy, a rent board commissioner. But, reportedly, those rules only apply to units that existed when the 1979 rules were passed.

Tuesday, December 08, 2009

NYC Judge Unfreezes Delinquent Homeowner's Bank Account Amidst "Sewer Service" Allegations Against Law Firm For Lender Holding Underwater 2nd Mortgage

In Staten Island, New York, the Staten Island Advance reports:
  • A new foreclosure tactic, whereby lenders or debt collectors holding second mortgages freeze bank accounts or garnish pay checks of already struggling homeowners, is emerging and making it even more difficult for people to hold onto their homes.(1)

***

  • George Apolinaris of Graniteville said his longtime companion, Maria Gil, got an unwelcome surprise when Ms. Gil tried to withdraw some money for groceries from two small bank accounts totaling $6,000 that the two maintained. The accounts were frozen and in the red for $250,000 -- twice the $126,000 owed on their second mortgage. Apolinaris said the couple never received any notice about the court action that froze the bank accounts. "They claim they handed a notice to somebody, but we don't know who it is," Apolinaris said.

  • Robert Brown, an attorney specializing in foreclosure and predatory lending cases, argued successfully in court that Ms. Gil had not been properly notified of judgment proceedings by attorneys for lender Citimortgage. In court papers, Brown noted that the lender's debt collection law firm, Forster and Garbus, had been cited by state Attorney General Andrew Cuomo for problems in serving legal papers to defendants in civil suits, also known as "sewer service."(2)

  • Last week, state Supreme Court Justice Judith McMahon sided with Brown and vacated the judgment, effectively unfreezing the couple's small bank accounts. Brown now plans to make a counterclaim under predatory lending laws. He said the couple had fallen behind on their first mortgage but foreclosure proceedings had not yet begun.

For the story, see Homeowners are getting hit a second time.

(1) According to the story, Josh Zinner of the Neighborhood Economic Development Advocacy Project in Manhattan said some lenders or trusts for banks that went out of business are selling off second mortgages today to debt collectors for pennies on the dollars. Those debt collectors are then going after the homeowners' bank accounts or pay checks to recoup whatever money they can. "The backdrop to that is there are real fundamental problems in the debt buyer industry," said Zinner. "The combination of the second mortgage problem with all the abuses in the debt collection industry is toxic, and could really create havoc for homeowners who are trying to avoid foreclosure on their primary mortgage."

(2) See 35 Law Firms Named In Suit Seeking To Void 100,000+ Money Judgments; 20+ Add'l Firms Currently In NY AG's Crosshairs In Ongoing "Sewer Service" Probe.

For more on New York's "sewer service" problem, see:

Full Speed Ahead For Zombie Debt Purchasers, Despite Lacking Proof Of Actual Debtor Or Debt, Significant Paperwork

Scripps Howard News Service reports:
  • For decades, credit-card companies and other firms would eventually give up after attempting to collect from deadbeat customers. Now, companies are packaging and selling many of those overdue accounts for pennies on the dollar to debt collectors. The collectors then aggressively pursue the debtors to repay, or they turn around and resell those same debts to other collection firms. This secondary debt market has mushroomed in recent years into a $60 billion industry. But the explosive growth has been accompanied by concerns over the business practices of the debt collectors.

  • Government officials and consumer watchdogs question the industry's often-shoddy recordkeeping, and say overly aggressive collectors sometimes break the law when going after old debts. "There are people who are attempting to get debt from consumers when they have no proof who the actual consumer is, no proof about the actual debt or the actual contract that incurred the debt, yet that has not stopped the debt-collection industry from going full steam ahead," says Ira Rheingold, executive director of the National Association of Consumer Advocates.

For more, see Bad Debts Have Become Big Business.

In a related story, see What Consumers Can Do When Debt Collectors Call.

Expired Statute Of Limitations Saves Homeowner $45K+; Stale Debt Too Old To Be Enforced, Says Judge About 30+ Year Old HOA Claim

In Ellicott City, Maryland, The Baltimore Sun reports:
  • Sometimes it pays to be stubborn. For more than 33 years, Joseph and Shirley Poteet ignored annual Columbia Association bills and later threats of possible foreclosure for not paying the community's unofficial property tax fees that accumulated to more than $45,000. Now, a Circuit Court judge has thrown out the homeowners' association claim as too old to be enforced.

***

  • Since the association lawsuit came 35 years after the first property fee notice, Circuit Judge Alfred L. Brennan agreed with the Poteets' lawyers in an Oct. 14 ruling that says the long-pending claim far exceeded the three-year statute of limitations. The homeowners association has appealed the case to the Court of Special Appeals.

***

  • "I just cannot understand why Columbia Association would have waited from '73 to '06 or whatever, to bring such an action," Brennan said during the hearing, according to a transcript. "I find that the [three-year] statute of limitations does apply in this case, very definitely," the judge said.

For the underlying facts in this story, see Statute of limitations saves couple from some $45,000 in fees (Columbia Association says it's appealing the ruling).

KC Legal Aid Pushes To Fight Off Illegal Foreclosure Evictions As Lenders Continue Ignoring Federal Tenant Protection Law

In Kansas City, Missouri, The Pitch reports:
  • Word on the street [...] is that some lenders aren't complying with the new law [that requires lenders who foreclose on rental properties to give their tenants at least 90 days to move out -- or even longer, in some cases].(1) It was designed to protect renters, but lenders can still get away with unlawful evictions if renters aren't aware of their rights.

  • [Executive Director of Legal Aid of Western Missouri(2) Gregg] Lombardi sent out an e-mail this week to the heads of charitable organizations all over Kansas City, asking that they encourage people who think they may be unlawfully forced out of foreclosed rental properties to call Legal Aid for help. "We are eager to take on cases to stop these unlawful evictions," Lombardi wrote in the email.

For the story, see Legal Aid is looking for renters facing eviction from foreclosed properties.

(1) The new federal law requires lenders taking title to foreclosed homes respect any existing tenant leases, and provide at least 90 days notice when vacating month-to-month renters. See Section 702(a)(2) of the Protecting Tenants at Foreclosure Act of 2009.

(2) Legal Aid of Western Missouri is a non-profit law firm providing essential legal services to low-income citizens living below the poverty level in a 40 county area in western Missouri.

NBA Owner "Clipped" For $2.7M+ In Settlement Of Race/Etnicity-Based Fair Housing Allegations; Discriminated Tenants To Share In $2.625M Pot

From the U.S. Department of Justice:
  • The Justice Department announced [last month] the largest monetary payment ever obtained by the department in the settlement of a case alleging housing discrimination in the rental of apartments. Los Angeles apartment owner Donald T. Sterling(1) has agreed to pay $2.725 million to settle allegations that he discriminated against African-Americans, Hispanics and families with children at apartment buildings he controls in Los Angeles.(2) [...] Among other things, the suit alleged that the defendants discriminated against non-Korean tenants and prospective tenants at buildings the defendants owned in the Koreatown area of Los Angeles.(3)

***

  • The settlement would also resolve two related lawsuits filed by former tenants at one of the properties. The two families, an African-American family and an interracial married couple with bi-racial children, alleged that the defendants demolished the private yards that had been part of their apartment and took other actions against them because of their race.

  • The settlement, which is memorialized in a proposed consent order that the parties have submitted to the court for approval, would require the defendants to pay a $100,000 civil penalty to the United States. Under the settlement, the defendants would also pay $2.625 million into a fund that would be used to pay monetary damages to persons who were harmed by the defendants’ discriminatory practices, including the tenants in the two related lawsuits discussed above. Any money left over would go to further fair housing education or enforcement in Los Angeles.

For the USDOJ press release, see Justice Department Obtains Record $2.725 Million Settlement of Housing Discrimination Lawsuit.

(1) Donald T. Sterling is the current owner of the National Basketball Association's Los Angeles Clippers. For more on Sterling, see:

(2) The defendants, who manage their apartments under the name Beverly Hills Properties, own and manage approximately 119 apartment buildings comprising over 5,000 apartments in Los Angeles County, according to the DOJ press release.

(3) According to the DOJ press release, the United States presented evidence that:

  • the defendants’ employees prepared internal reports that identified the race of tenants at properties the defendants purchased in Koreatown, and
  • the defendants made statements to employees at Koreatown buildings indicating that African-Americans and Hispanics were not desirable tenants.

The United States also presented expert analysis in court filings showing that the defendants rented to far fewer Hispanics and African-Americans in Koreatown which than would be expected based on income and other demographic characteristics, according to the press release.

Monday, December 07, 2009

Newport Beach Man Probed In Alleged Loan Modification Ripoff; Clipped Approximately 50 Homeowners Out Of $175K+, Say Cops

In Newport Beach, California, CBS 2/KCAL-TV Channel 9 report:
  • Police say a Newport Beach man ripped off distressed homeowners with loan modification businesses that did nothing to help his customers save their homes. Larry Ervan Gunter, 34, is accused of taking money from homeowners having trouble making their mortgage payments and promising to work out better terms on their loans, but never doing anything on their behalf, Sgt. Evan Sailor said.

  • Gunter owns Help Modify Now, 4665 MacArthur Court, Suite 100, and Consumer Resource Law Center, 301 Shipyard Way. Gunter's companies charge homeowners at risk of foreclosure $1,500 to $3,500 to start a loan-modification process, Sailor said. About 50 customers told police that once they made their initial payment, they never heard back from anyone at the companies and all attempts to contact them were unsuccessful. The victims lost more than $175,000, Sailor said. Gunter was arrested Tuesday on a probation violation, Sailor said. Newport Beach police are working with the Orange County District Attorney's office to determine what charges should be filed. Anyone else who believes they are victims can call Detective Bob Watts at (949) 644-3799 or (800) 550-NBPD.

Source: Newport Beach Man Accused Of Loan Mod Fraud.

Foreclosure Rescue Operator Gets 30 Months In Equity Stripping Mortgage Scam; Bogus Sale Leasebacks Left Investors Holding The Bag, Homeowners Booted

In Edmond, Oklahoma, The Edmond Sun reports:
  • An Edmond man was sentenced Wednesday to serve 30 months in prison for money laundering, stemming from a mortgage fraud scheme. Phillip Neill Seibel, 39, of Edmond, was sentenced by U.S. District Judge David Russell, who ordered Seibel to pay $770,037.31 in restitution and serve three years of supervised release after completing his sentence.

***

  • A licensed mortgage broker, Seibel formed Homesavers in April 2007. The company had an Oklahoma City address. Homesavers contacted homeowners facing foreclosure and told them they could remain in their homes while they worked to improve their credit, according to court records and court proceedings.(1)

For the story, see Edmond man sentenced in fraud.

(1) According to the story, the company also promised to find investors to buy homes and to let people remain in their homes and begin paying “rent.” Seibel’s company reportedly promised to use those payments to pay mortgages, and said sellers could rebuy the homes for a fixed price once their credit improved. The company promised the potential investors their only role would be to buy the homes. It would coordinate all rent payments with the sellers and ensure mortgages were paid on time, the story states. Homesavers then assisted the investors in obtaining financing to buy the homes, and regularly submitted false documents on the investors’ behalf to mortgage companies and assisted investors in submitting false documents to the mortgage companies. At closing, Seibel’s company would arrange to receive the equity checks directly and, without permission, endorse the sellers’ names and deposit the checks into a company bank account. The story states that Homesavers did not make the mortgage payments on the homes as promised, but repeatedly assured sellers falsely that mortgage payments were being made. Most of the homes were reportedly foreclosed upon, and the sellers lost all equity in their homes, according to the court document.

Arizona, Feds Join Forces In Battle Against Loan Modification Rackets; More Criminal Prosecutions Possible, Says State AG

In Phoenix, Arizona, The Arizona Republic reports:
  • Arizona's top prosecutor is partnering with federal regulators to stop more loan modification scams aimed at struggling homeowners. Attorney General Terry Goddard said his office and federal prosecutors plan to work together to go after the firms that market help to homeowners facing foreclosure but instead "cheat homeowners out of their last bit of cash." "This joint effort and sharing of information on loan modification scams could result in more criminal prosecutions," Goddard said. "There are a lot of cases and complaints in the pipeline. We have never had this level of cooperation."

For more, see Arizona unites with feds to target home loan schemes (Officials broaden reach to fight loan-modification scam artists).

Mortgage Firm Faces "Appraisal Shopping" Allegations In Ohio AG Civil Suit; State Settles Similar Claims Against Three Others For $160K+

From the Office of the Ohio Attorney General:
  • In an ongoing effort to hold the mortgage industry accountable for its part in the foreclosure crisis, Ohio Attorney General Richard Cordray [...] filed a lawsuit against Weststar Mortgage, Inc. In the lawsuit, Cordray charges the Washington D.C. area home appraisal company with improperly influencing Ohio appraisals.

  • According to the complaint filed in the Court of Common Pleas of Belmont County, Weststar violated Ohio law through a series of actions including using pre-printed “estimated value” forms for appraisals and shopping for a higher appraisal amount on behalf of clients. “Appraisal influence is a damaging practice that often goes undetected until it’s too late,” said Cordray. “With this case, we advance one more step in cleaning up the destructive actions that led to the foreclosure crisis.”(1)

For the Ohio AG press release, see Cordray Holds Home Appraisal Industry Accountable.

(1) In addition to this lawsuit, three other companies accused of attempting to influence Ohio home appraisals have recently settled lawsuits with the state, resulting in a combined total of more than $150,000 in restitution and civil penalties, according to the Ohio AG press release:

  • Cordray settled with First Ohio Banc and Lending to resolve a lawsuit alleging the company engaged in unfair and deceptive home appraisal practices including deceptive advertising violations. In the agreed entry, First Ohio agreed to pay the state $52,400, which includes restitution to consumers;
  • In another agreement, Fiserv Lending Solutions, based in Connecticut agreed to pay $95,000 to the state, which is the largest undue influence settlement in Ohio to date;
  • In September, Cordray entered into a similar agreement with Nations Lending, which agreed to pay the state $15,000 and will keep all appraisal records for three years.

Fannie, Freddie Seek To Have Big Lenders Eat Bad Home Loans; Poor Underwriting Drives Mortgage Finance Giants' Recovery Efforts Over Debt Gone Sour

Dow Jones Newswires reports:
  • As home loans sour at a rapid clip, mortgage finance giants Fannie Mae and Freddie Mac are aggressively bouncing back defectively underwritten loans to lenders. The result: higher loan-loss reserves for the lenders and new headwind for banks trying to escape the housing downturn.

  • For lenders such as Wells Fargo & Co., Bank of America Corp., J.P. Morgan Chase & Co. and Citigroup Inc., which are among the largest sellers of mortgages to Fannie and Freddie, this could mean buying back souring loans at a loss. Banks are already on the hook for mortgages residing on their books. But Fannie and Freddie are seeking to hold them accountable as well for what they say are improperly underwritten mortgages sold to them in the past.(1)

For more, see Headwind For Lenders As Fannie, Freddie Bounce Back Loans.

(1) Reportedly, lenders are also pushing back and refusing some repurchase requests. Moreover, lenders don't have strict disclosure rules for these mortgage buybacks or the reserves to pay for them, so it's difficult for shareholders to estimate the potential exposure of a company, the story states. In most cases, investors holding these loans can force the lender to take the mortgages back, and recover the unpaid principal on them, if they were underwritten improperly. For instance, lenders would have to buy back loans from investors if borrowers lied about their income or misstated that the property is their primary residence, the story states. Other reasons a loan may be put back: a fraudulent home appraisal or inadequate documentation.

Sunday, December 06, 2009

Arizona Resident Fights Back To Undo Mortgage Unwittingly Signed Shortly After Coming Out Of Coma

In Maricopa County, Arizona, inMaricopa.com reports:
  • Rancho El Dorado resident Nichole Italiano sits in her home surrounded by mountains of paperwork. For the past six months she has gathered data, collected testimony and spent hours at a downtown Phoenix law office preparing a mortgage fraud case revolving around a broker having her sign loan documents a few weeks after coming out of a coma. Her unusual story began several years ago, though even today, it’s no closer to being resolved.

For the rest of the story, see Maricopa resident fights to win back her life.

Debt Collector's Use Of 1st Amendment To Get Default Judgment Against Mentally Disabled Debtor Without Giving Proper Notice Slammed By Alaska Supremes

Public Citizen, a national, nonprofit consumer advocacy organization, recently announced:
  • The Alaska Supreme Court ruled [last month] that debt collectors who employ unfair or deceptive tactics during collection lawsuits are not shielded by the First Amendment.(1)

***

  • The case arose out of an attempt by a collection agency to sue Robin Pepper, a mentally disabled woman, without providing her with proper notice. The agency sent papers to a nonexistent address, misrepresented to the court that Pepper was competent, and tried to get a default judgment against her.

  • Pepper, represented by Alaska Legal Services,(2) then brought a separate lawsuit, alleging that the collection agency’s practices violated the Unfair Trade Practices Act. The collection agency asked the court to dismiss Pepper’s case on the theory that its litigation conduct was protected by the First Amendment, which provides a right of access to the courts. The lower court agreed and dismissed Pepper’s case. Alaska Legal Services asked Public Citizen to handle the case on appeal.(3)

  • The Alaska Supreme Court broadly rejected the debt collector’s immunity defense, ruling that the First Amendment’s petition clause does not extend to conduct that was unfair, deceptive, and in violation of the Unfair Trade Practices Act. Quoting Public Citizen’s brief, the court ruled that debt collectors have “no legitimate interest in pursuing collection litigation without notifying debtors, or in seeking to default incompetent debtors without notice to their lawyers or guardians.”(4)(5)

For Public Citizen's press release, see Debt collectors drubbed by Alaska high court (Constitution Does Not Shield Abusive Tactics by Debt Collectors, Alaska Supreme Court Rules).

For the ruling of the Alaska Supreme Court, see Pepper v. Routh Crabtree, APC, Supreme Court No. S-13042, No. 6437, 2009 Alas. LEXIS 160 (November 20, 2009).

(1) According to the press release, this case is the first ruling on the issue by any court nationwide. Debt collection firms have raised a constitutional defense, based on the right to petition the courts, in a series of consumer cases. This ruling overturns a lower-court decision that had ruled in favor of a collection agency.

(2) Alaska Legal Services is a private, nonprofit law firm that provides free civil legal assistance to low-income Alaskans.

(3) Also appearing in this lawsuit, as "friends of the court" on behalf of the consumer, were the National Association of Consumer Advocates and the National Consumer Law Center.

(4)The Alaska Supreme Court’s ruling sends the message that debt collection companies can’t get away with abusive tactics simply by hiring lawyers,” said Deepak Gupta, the Public Citizen attorney who argued the case. “The court rejected a dangerous new immunity defense that would have created a gaping hole in consumer protection law.”

(5) Had the court ruled in the debt collection agency's favor, collectors would be in a position to slap judgment liens against any real estate owned by defaulting debtors and force the sale of those properties (subject to any applicable state or federal homestead exemption protections), as well as garnish the wages and seize the bank accounts belonging to these unwitting victims. For more on debt collectors and their attorneys obtaining default judgments against unwitting consumers by failing to serve proper notice of the lawsuit on them (ie. "sewer service"), see Justice Disserved: A Preliminary Analysis of the Exceptionally Low Appearance Rate by Defendants in Lawsuits Filed in the Civil Court of the City of New York.

Michigan AG Charges Alleged Ponzi Scheme Operator With Peddling Bogus Foreclosed & Distressed Property Investment Opportunities

From the Office of the Michigan Attorney General:
  • Attorney General Mike Cox [...] announced the early morning arrest of a Grosse Ile woman accused of defrauding dozens of people in a massive real-estate Ponzi scheme. Rita Gosselin, 58, is charged with racketeering and multiple counts of obtaining money under false pretenses for orchestrating numerous fraudulent real estate investments and stealing hundreds of thousands of dollars from Michigan families.

***

  • Between April 2007 and September of 2008, Gosselin is accused of orchestrating a real-estate investment ponzi scheme in metro-Detroit. Gosselin allegedly enticed investors with claims she was able to purchase foreclosed and distressed properties in bulk and renovate the homes to sell at a profit. Gosselin allegedly promised investors regular monthly payments. [...] Few investors received any of the payments promised and all lost some, if not all the money they invested. Gosselin's scheme may have taken in as much as half a million dollars from as many as 20 victims.

For the Michigan AG press release, see Cox Files Charges in Massive Detroit-Area Real Estate Ponzi Scheme.

New Jersey Fair Housing Advocate Shakes $30K Out Of Landlord To Settle Housing Discrimination Allegations

From the Office of the New Jersey Attorney General:
  • The Division on Civil Rights announced [...] that the owners of a Somerset County apartment complex have paid $30,000 to the Fair Housing Council of Northern Jersey to settle charges the complex engaged in racial and other types of unlawful discrimination while dealing with testers it believed were prospective tenants.(1)

For the entire NJ AG press release, see Division on Civil Rights Announces Settlement of Discrimination Complaint Involving Treatment of Testers at Apartment Complex.

For the settlement agreement and Division on Civil Rights complaint, see Fair Housing Council of Northern New Jersey v. Kimberwyck Village.

(1) According to the press release, the Fair Housing Council sent a total of nine testers into Kimberwyck Village in 2007 and 2008. A subsequent complaint filed with the Division in October 2008 charged that Kimberwyck employees showed an obvious preference toward white testers they believed were prospective tenants. Specifically, the complaint charged, Kimberwyck staffers showed white testers cleaner, more ready-for-occupancy dwellings, presented the complex’s rental terms and income requirements in the most attractive light, and in one case offered to “hold” a rental unit for a white tester.

Meanwhile, the Complaint charged, Kimberwyck employees showed African-American testers less clean and well-maintained rental units, neglected to mention certain favorable rental terms that had been mentioned to white testers and did not offers to hold rental units for them. In addition, the complaint alleged that Kimberwyck employees made disparaging remarks to testers about other minorities, including Mexicans and Indians. Specifically, one Kimberwyck employee remarked about the financial unreliability of Mexican rental applicants, and used a slur to refer to Indian tenants.

In addition to charging race-based and national-origin-based discrimination, the Fair Housing Council complaint also charged Kimberwyck with unlawfully discriminating against families. For example, testers who inquired about rental options for families with children were told that tenants with children must rent two-bedroom apartments because children were prohibited from living in one-bedroom apartments or in upstairs units. Under the settlement agreement, there is no acknowledgment of wrongdoing by Kimberwyck or Kimberwyck Associates.

Recent DOJ Actions Involving Housing Rights Violations, Alleged Housing Discrimination

The U.S. Department of Justice has recently issued the following press releases in connection with its efforts in connection with housing rights violations and alleged housing discrimination:
  • Arkansas Man Sentenced on Civil Rights Charges in Cross Burning Conspiracy: Dustin Nix of Donaldson, Ark, was sentenced [...] in federal court in Fort Smith, Ark, on federal civil rights charges related to a conspiracy to drive a woman and her children from their home because they associated with African-Americans. [...] Specifically, on June 15, 2008, Nix and the others agreed to construct a cross and burn it in front of the victims’ home. Nix and the others erected the cross in front of the victims’ home and attempted to set it on fire. [...] Nix’s co-conspirators, Jacob A. Wingo, Richard W. Robins, Clayton D. Morrison and Darren E. McKim, pleaded guilty in September 2009, for their roles in the conspiracy. Sentencing for Wingo, Robins, Morrison and McKim has been scheduled for Dec. 7, 2009. (Go here for other DOJ actions involving cross burning incidents).

  • Justice Department Obtains $131,500 in Discrimination Settlement with Chattanooga, Tennessee, Apartment Complex: The United States has reached a settlement resolving a housing discrimination lawsuit in Tennessee concerning discrimination against families with children, the Justice Department announced. Under the consent decree, [... the] defendants [...] will pay $131,500 in monetary relief to 15 identified victims and the United States. The Department’s complaint alleged that the owners, property managers, and management company violated the Fair Housing Act by refusing to rent apartments to persons with children, discouraging persons with children from renting dwellings owned and managed by the defendants, steering persons with children to another apartment complex and making statements that discriminated on the basis of familial status. [...] The Department conducted its investigation using fair-housing testers – individuals who pose as renters for purposes of gathering information about possible discriminatory practices in the rental of apartments.

  • Justice Department Resolves Lawsuit Alleging Disability-Based Housing Discrimination at 11 Multifamily Housing Complexes in Tennessee, Louisiana, Alabama and Texas: The Justice Department [...] announced a settlement of its lawsuit alleging that those involved in the design and construction of 11 multifamily housing complexes discriminated on the basis of disability. The complexes are located in four states and contain more than 800 units covered by the Fair Housing Act’s accessibility provisions. Under the settlement, which must still be approved by the U.S. District Court for the Western District of Tennessee, 11 defendants will pay all costs related to making the complexes for which they were responsible accessible to persons with disabilities and pay up to $117,000 to compensate individuals harmed by the inaccessible housing. [...] The complaint was originally filed in Memphis, after the United States Attorney received a copy of a survey conducted by the Memphis Center for Independent Living of three of the Memphis properties indicating violations of the Fair Housing Act.

  • Justice Department Lawsuit Charges Atlanta Condominium with Discrimination Against Families with Children: The Justice Department [...] filed a lawsuit against an Atlanta condominium association, as well as the owner of a unit and the real estate agent who sold it, for violating the Fair Housing Act by discriminating against families with children. The lawsuit, [...] charges that the Georgian Manor Condominium Association maintained policies discouraging families with children from living in the Georgian Manor complex [...]. It also charges that the owner of a unit in the complex refused to sell to families with children and that the real estate agents hired to sell the unit, Jennifer Sherrouse and Harry Norman Realtors, publicized the restriction. [...] This lawsuit arose as a result of a complaint filed with the U.S. Department of Housing and Urban Development (HUD) by a fair housing group.

  • Justice Department Sues Chicago Area Landlord for Refusing to Rent to African Americans: The United States has filed a lawsuit against Terence Flanagan, a Chicago area property owner and rental agent, alleging that he refused to rent properties he owned or controlled to African-Americans, in violation of the federal Fair Housing Act, the Justice Department announced. The lawsuit, [...] alleges that Flanagan refused to rent a single-family house he owns in Orland Park, Ill., to Kamal Alex Majeid, who is African-American, because of his race. The lawsuit also alleges that Flanagan asked a white tester employed by the Justice Department whether her husband was African-American and admitted to her that he did not want to rent to African-Americans. The suit further alleges that Flanagan told this tester that he had numerous other rental properties in the Chicago area. This lawsuit resulted from a complaint submitted to the Justice Department by the South Suburban Housing Center, a private suburban Chicago fair housing organization, after it was contacted by Majeid.

Saturday, December 05, 2009

Prosecutors: Scam Artist Used Parents' Stolen I.D. To Buy & Use Five Condos In Rent Skimming Racket Ultimately Ending In Foreclosure Of Each Unit

In San Diego, California, NBC San Diego reports:
  • Tyler Adams is a fraud artist with many faces and many names, prosecutors said. He targeted his own parents in a real estate scam. [...] According to court documents from San Diego, Adams stole the identity of his mother and stepfather to buy five condos in San Diego worth more than $3,000,000 combined. The documents say he then collected rent on the units, but never paid the mortgage. All five condos eventually went into foreclosure. The allegations also allege Adams posed as the Realtor in the sale of the condos and collected another $180,000 in commission fees.

  • His mother and stepfather live in a mobile home in Pennsylvania worth an estimated $50,000. When they were contacted about the condos going into foreclosure, they suspected their son, but were unable to reach him.

Source: A Fraud of Many Faces (A man, who allegedly even conned his parents, used cosmetic surgery to scam people).

BofA Locks Financially Strapped Borrower Out Of Home Days After Agreeing To Revised Loan Payment Program

In Trenton, New Jersey, WPVI-TV Channel 6 reports:
  • A 57-year-old woman in Trenton is trying to put the pieces back together after being victimized by a mistake by her mortgage company which just happens to be the Bank of America. Three days after being locked out of her house because of a bank mistake, Nina Morra was let back in [Friday], only to find she had no water, no electric, and no heat.

***

  • After spending several months in the hospital following a stroke in January, Russian-born Nina fell behind in her mortgage payments to Bank of America and was facing foreclosure, but on November 19 she'd been accepted in to a repayment plan. Nina then went away for a week to visit relatives for Thanksgiving, but when she returned late Tuesday night to her Division Street home she found the locks had been changed.

***

  • Apparently Nina's paperwork for the repayment plan didn't clear quickly enough to stop an inspector for the bank from changing the locks and declaring her house abandoned while she was away. [Company s]pokeswoman Jumana Bauwens says Bank of America takes responsibility because it was their contractors and promised to pay any costs associated with the mix-up.

For the story, see Mortgage mix-up in Trenton. ForeclosureLockOuts

NJ Woman Accused Of Abusing POA To Steal Nursing Home-Bound Mom's Monthly Social Security, Pension Payments & Stiffing Care Facility

From the Office of the New Jersey Attorney General:
  • Attorney General Anne Milgram and Division of Criminal Justice Director Deborah L. Gramiccioni announced that a Toms River woman has been indicted for allegedly stealing monies that her mother received from Social Security and a pension plan. [...] Laura Lembo, 46, of Toms River, was charged [...] with third-degree theft by unlawful taking or disposition.

  • The Ocean County grand jury indictment alleges that [...] Lembo exercised unlawful control of the property of her 80 year-old mother, a Medicaid recipient. An investigation determined that Lembo, who had power of attorney over her mother’s income – including her monthly Social Security and pension checks – allegedly failed to remit all of her mother’s income to the nursing care facility in which her mother resided. As a condition of continued Medicaid eligibility, this income, minus a small personal needs allowance, must be paid to the facility to partially cover the cost of the mother’s ongoing care. The investigation revealed that during the time in question, this income was $40,052.88 but, of this amount, Lembo allegedly paid the facility only $21,233.13 and kept the remainder for her own use.

For the NJ AG press release, see Toms River Woman Charged With Theft for Diverting Part of Her Mother’s Social Security And Pension Income.

Attorney Charged In £90,000 Ripoff Of Recently Widowed Blind 90-Year Old; Allegedly Forged POA Before Looting Senior's Savings Accounts

In Codsall, U.K., the Express & Star reports:
  • A scheming solicitor branded The Vulture swindled £90,000 from the blind widow of a millionaire Black Country industrialist, the Express & Star can reveal. Veronica Wilkinson spent thousands on plastic surgery, designer clothes, pets and a £37,000 Audi within days of the death of 86-year-old Les Carrier. Mr Carrier, former chairman of Wednesbury-based steel firm FH Lloyds, lived with his wife Doris, known as Dot, for most of their married life in Codsall.

  • Wilkinson was head of the wills and probate department at the Codsall office of law firm Dunham, Brindley and Linn – now DBL Talbots – when she forged a document to give her power of attorney over Mrs Carrier’s financial affairs. In less than two months, the debt-ridden lawyer plundered £72,086 from the 90-year-old’s Lloyds TSB bank account and £21,150 from her Hinckley Building Society account.

For more, see Lawyer stole from widow. FinancialAbuseOfElderlyAlpha

Justice Department Scores Win Against Rogue Towing Outfit For Repossessing, Selling 20+ Vehicles Belonging To Servicemembers Without Court Orders

In Norfolk, Virginia, Air Force Times reports:
  • The Justice Department has scored a victory for service members against a Norfolk, Va., towing company that sold off more than 20 service members’ cars without court orders in recent years. The civil case is not over; it will go to trial next year to determine damages owed to the service members whose vehicles were towed by B.C. Enterprises Inc., doing business as Aristocrat Towing.

  • But the decision clarifies protections for troops under the Servicemembers’ Civil Relief Act and sends a clear message to industry, according to SCRA experts. The decision affirms that service members “have the right not to have their vehicles sold at auction without a court order ... even if they did not notify the towing company of their military status in advance,” said Justice Department spokesman Alejandro Miyar.

For more, see Towing company improperly sold off troops’ cars, court rules.

(1) According to the story, Section 537 of the Servicemembers’ Civil Relief Act states that without a court order, a person holding a lien on the property or effects of a service member cannot foreclose or enforce any lien during any period of military service by the member and for 90 days afterward. The U.S. District Court, Eastern District of Virginia, reportedly ruled that Section 537 is a “strict liability” provision, meaning service members do not need to take any action to be protected. “Even if the defendants exercised utmost care in investigating their victims’ military status, they face liability for their actions,” wrote District Judge Robert Doumar in his Nov. 6 order, the story states.

Go here for free legal assistance for military servicemembers and their families.

Friday, December 04, 2009

Financially Strapped Couple Scores Against Home Lender; Pays $1K In Full Payment Of Allegedly Fraudulent $103K Loan

In Bradenton, Florida, the Sarasota Herald Tribune reports:
  • Pedro Torres and his wife purchased the Bradenton home they were renting in 2007 because it reminded them of their native Puerto Rico. They were told their monthly payment would be $670, but it turned out to be $800, about half of their income from Social Security. The couple, both over 65, struggled so much to make payments that Torres collected aluminum cans for food money. Torres and his wife, Ederlinda Soto, likely would have lost the home to foreclosure over the $103,000 mortgage.

  • But when a Gulfcoast Legal Services attorney(1) found numerous problems and fraud in the loan, the lender offered to give them the home for a single $1,000 settlement payment.(2)

For more, see Bradenton couple prevail in mortgage imbroglio (Pedro Torres and his wife, Ederlinda Soto, struggled to pay their mortgage, which they thought would be $670 a month but ended up being $800. An attorney discovered so many problems in their loan document that they now own their Bradenton home free and clear).

(1) Gulfcoast Legal Services is a non-profit corporation providing free legal aid to income eligible residents of the greater Tampa Bay area, with offices in Pinellas, Manatee, Sarasota and Hillsborough counties.

(2) According to the story, the retired couple's mortgage contained problems common to loans approved during the height of Florida's real estate boom, said their attorney, Dawn Marie Bates-Buchanan. Torres and Soto reportedly got the low settlement offer from an attorney for California-based Accredited Home Lenders because the loan would likely have been voided if the case had gone to trial, Buchanan said. Also, Accredited could have faced up to $2,000 sanctions for each violation under truth in lending and unfair business practices laws, the story states. Accredited's attorney reportedly called Buchanan and said, "Basically, 'What do you want?'" she said. "My answer is, 'I don't want them to have a mortgage.'" Now, Torres and Soto are continuing their lawsuit against the mortgage broker and the sister and brother-in-law who helped arrange the loan, the story states. Gulfcoast Legal Services reportedly took the case because the couple is over 65 and has low income. The legal fees would have been unaffordable otherwise, something that leaves many Spanish-speaking victims of mortgage fraud unable to fight. UndoMortgageLoans TILAdelta

Maryland Regulator Issues C & D Orders Against Five Firms Accused Of Running Illegal Upfront Fee Loan Modification Schemes

In Baltimore, Maryland, The Daily Record reports:
  • State officials have ordered five companies to shut down illegal home loan modification schemes that targeted Maryland residents facing foreclosure, the Department of Labor, Licensing and Regulation announced [late last month].(1) Homeowners paid thousands of dollars in upfront fees to companies that promised to modify their loans in order to avoid foreclosure, according to DLLR. Not only did the companies fail to deliver, but they stopped returning phone calls, misrepresented the loan modification process and ignored requests for refunds, the department alleged.

***

  • The cease and desist orders are usually enough to bring the companies to the bargaining table to discuss refunding consumers' upfront fees, which typically amount to about $3,500, [Assistant Commissioner for Enforcement Stephen] Prozeralik said. It is illegal for foreclosure consultants and credit services companies to charge such fees. "We've been successful in the past with Maryland companies," he said "They've sat done with us and worked something out. It is a little more difficult with these entities in California and Florida." [...] "We have well over 120-odd cases under investigation," Prozeralik said. "And then when you look at those cases, they're multiplied by the number of consumers under them. It adds up to thousands of consumers who have been ripped off."

For the story, see Md. Department of Labor, Licensing and Regulation orders 5 firms to end loan modification schemes.

(1) Companies served notices were:

  • Equity Recovery Services, Towson, Md.;
  • U.S. Equity Solutions, Owings Mills, Md.;
  • GIAN Inc., Laurel, Md.;
  • Save My Home USA Co. Inc., Michigan;
  • Help Modify Now Inc., California (The owner, Larry Ervan Gunter, 34, has reportedly recently been arrested by Newport Beach, California police in connection with alleged ripoffs his firm is accused of - see CBS 2/KCAL-TV Channel 9: Newport Beach Man Accused Of Loan Mod Fraud).

Rhode Island Closing Attorney Gets 42 Months For Pocketing $2.5M In Escrow Funds & Failing To Pay Off Existing Mortgages In Real Estate Transactions

From the Office of the U.S. Attorney (Providence, Rhode Island):
  • A federal judge has sentenced Pasquale Scavitti, III, a former attorney based in Cranston, to 42 months in prison for diverting more than $2.5 million in mortgage funds from his firm’s client account for personal use.

***

  • As part of his practice, he maintained a client escrow bank account. Mortgage Guarantee and Title Company, a real estate title and closing company, utilized the services of Scavitti’s law office to facilitate mortgage lending. As part of those services, mortgage and refinancing proceeds were wired into the client escrow account at Scavitti’s firm. The firm’s obligations were to pay off existing liabilities from those loan proceeds. Between 2003 and August 2008, Scavitti directed that client escrow account funds not be used to pay off the corresponding existing mortgages but rather to pay for various personal and business expenses. Escrow funds were also used to pay off previously negotiated mortgages that were already delinquent, since they had not been paid off in a timely fashion.

***

  • In September 2007, Mortgage Guarantee terminated the authority of Scavitti’s law office and its attorneys from acting as approved attorneys for Mortgage Guarantee. However, for subsequent mortgages, Scavitti contacted other attorneys to act as title attorneys on real estate transactions and closings. For these transactions, Scavitti falsified letters purporting to authorize his firm to act as the approved attorney for Mortgage Guarantee.(1)

For the U.S. Attorney press release, see Attorney is sentenced in $2.5 million mortgage fraud scheme.

(1) As a result of Scavitti’s fraudulent scheme, he failed to pay off 13 mortgage loans and refinancing transactions, resulting in total losses of approximately $2.5 million to borrowers and financial institutions, the press release states. EscrowRipOffKappa

Discipline Recommended For Title Agency Owner Accused Of Pocketing Premiums & Failing To Remit To Insurance Underwriter

In St. Paul, Minnesota, the Duluth News Tribune reports:
  • An administrative law judge in St. Paul is recommending that the owner of Scenic Title & Abstract be disciplined for failing to remit title insurance premiums in the last four years. Kevin Eckholm, owner of the now-closed title company in Duluth and Two Harbors, was accused in October of fraud and operating without proper licenses after an investigation by the Minnesota Department of Commerce. Eckholm was then accused of collecting title insurance premiums 237 times dating to 2006 and failing to submit that money to the title insurance company. Judge Eric L. Lipman concluded after a hearing in late October that in “nearly 100 separate transactions” Eckholm failed to “maintain sufficient account balances so as to timely remit premiums to Land America.”

***

  • Title insurance is packaged with the purchase of property to protect new owners or their lenders against unforeseen challenges to their ownership. Minnesota Department of Commerce officials said purchasers of title insurance through Scenic Title should not worry about insurance coverage. “It would be fair to say that they all have title insurance,” Rochelle Barnhart, a former department spokeswoman told the News Tribune in October. “So there is no repercussion to those customers at all.”

For more, see Judge recommends discipline against Duluth title company (Kevin Eckholm, owner of Scenic Title in Duluth and Two Harbors, was accused of collecting title insurance premiums and failing to submit that money to the title insurance company).

See also, Minnesota Department of Commerce press release: Title Insurance Company in Duluth and Two Harbors charged with fraud.

State Protection Fund Coughs Up $122K To Cover Client Losses From Illegally Pocketed Real Estate Closing Cash, Unearned Fees By Dishonest NJ Attorneys

The New Jersey Lawyers’ Fund for Client Protection recently announced:
  • During the third quarter of 2009, the New Jersey Lawyers’ Fund for Client Protection, funded by the State’s lawyers and judges, paid $122,606.14 to clients for losses caused by 7 lawyers,(1) the Board of Trustees announced [...]. The Fund’s purpose is to pay on behalf of the honest majority of lawyers for the wrongdoing of the few who are suspended or disbarred for misappropriation.(2)

***

  • For a claim to be paid, the attorney against whom it is filed must have been a member of the Bar, acting as either attorney or fiduciary, at the time of the incident; and unless deceased, must have been disbarred or suspended from the Bar, or convicted of embezzlement or other misappropriation of property. An individual client can receive up to $400,000 (for claims arising after January 1, 2007, lesser amounts for claims arising prior to that date) and the Fund can provide up to $1,500,000 in claims against a given lawyer. Special permission can be granted by the Supreme Court to exceed the aggregate limit.(3)

For the announcement, see Lawyers’ Fund for Client Protection Releases Third Quarter Report.

(1) Go here for the list of the third quarter claim awards and status of each attorney under the Supreme Court discipline system. The Fund's findings involve improperly pocketed client money by attorneys derived from real estate closings, an estate settlement, and the dishonest retention of unearned legal fees.

(2) The Fund only covers client losses due to dishonest conduct by the attorney who is licensed in New Jersey. Cases involving legal malpractice and negligence are handled through Civil Court actions and fee disputes through the District Fee Arbitration Committees established by the Supreme Court.

(3) If a New Jersey attorney, either in the course of representing you or acting as a fiduciary, screws you out of money or property through dishonest conduct, go to the New Jersey Lawyers' Fund for Client Protection for information on how to recover some or all of your losses from the fund.

For other states and Canada, see:

Victimized In Equity Stripping Scam, Minnesota Couple In Foreclosure Now Fight Feds In Attempt To Avoid Being Booted From Home

In Golden Valley, Minnesota, the Star Tribune reports:
  • Raise your hand if you've heard something like this before: A couple looking to save money in tough times refinanced their home -- only to discover they'd been taken in by fraud.(1) Now they are fighting foreclosure and the loss of their home. What you probably haven't heard before is that they are being foreclosed on by the Federal Deposit Insurance Corp., a federal agency that generally pushes to keep people in their homes by reworking loans rather than foreclosing them. So Glenn and Brenda Clark of Golden Valley are taking another unusual step -- they are fighting their foreclosure in federal court.

For more, see Victims of mortgage scam fight foreclosure in court (A Golden Valley couple take their case to federal court to avoid eviction).

(1) The homeowners in this story were reportedly ripped off in an equity stripping scam by Michael Fiorito, 41, who a federal jury convicted in May, 2009 on seven criminal counts in connection with a scheme that targeted vulnerable homeowners, according to the story. Working with an assistant, he reportedly devised a program to defraud homeowners who were in foreclosure or behind on their payments. He and the assistant convinced homeowners to refinance their homes -- often after inflated appraisals -- and then stole some or all of the equity checks the homeowners were to receive, the story states. In all, Fiorito reportedly stripped more than $400,000 in equity from at least 17 victims, and is scheduled to be sentenced in federal court on Dec. 30.