Wednesday, January 06, 2010

Ex-Loss Mitigation Negotiator Cops Plea, Faces Up To 5 Years, $250K In Fines For Ripping Off Lender-Employer In Short Sale Scam

In Central Florida, the Orlando Sentinel reports:
  • According to court documents, [former loss-mitigation negotiator with Taylor, Bean & Whitaker Richard] Nanan was part of a short-sale scheme with Victor Cedeno, a fellow Taylor, Bean & Whitaker employee. Nanan and Cedeno worked with real-estate agents, home buyers, title agents and lenders during short sales financed by Taylor, Bean & Whitaker, according to court documents.

  • Nanan negotiated and approved short sales of foreclosed homes owned by Taylor, Bean & Whitaker with mortgages for about 90 percent of the mortgaged value of properties, according to his plea agreement. Then, they falsely reported they approved the sales at about 80 percent of the mortgaged value, court records said.

  • Cedeno and Nanan intercepted the payoff checks, which were then fraudulently endorsed by Cedeno, Nanan's plea agreement said. Cedeno and his girlfriend, Genesis Valdez, would retain any amount from the closing in excess of that 80 percent, and paid Nanan for his role. Nanan, who pleaded to a conspiracy charge, spoke briefly during the hearing. He faces up to five years in prison and a fine of $250,000.

Source: Two men plead guilty in mortgage fraud cases.

Colorado Homeowner Demands Note, Alleges Fraud In Suit Seeking To Block Foreclosure

In Platt Park, Colorado, The Denver Daily News reports:
  • Platt Park resident Vicki Dillard is demanding that the bank that controls her mortgage “show me the note” if it wants to foreclose on her home. Dillard is joining a national movement in which homeowners are attempting to delay or block foreclosures by asking that banks produce the original mortgage note if they want to foreclose on a home. Because mortgages are sold and packaged into bonds many times over after a lender issues a mortgage note, many banks have been having trouble producing the original note.

***

  • She has filed a lawsuit seeking to block the foreclosure. In addition to her “show me the note” argument, Dillard also is arguing that her lenders violated federal regulations requiring them to be completely honest and disclose all terms and conditions of the mortgage agreements. The lenders have signed an affidavit of lost note acknowledging that they have lost the original mortgage documents, which Dillard believes will bolster her case.

  • But the law is vague when it comes to requiring banks to produce the note. It’s unclear whether in Colorado the “show me the note” argument is an acceptable defense. Mortgage counselors warn against the defense, instead counseling their clients to work with lenders to save their homes.

For more, see ‘Show me the note’ (Woman asks lenders to show original mortgage note in foreclosure).

Register Of Deeds Implements New System To Alert Property Owners To Forged Deed, Real Estate Title-Hijacking Scams

In Grand Haven, Michigan, the Muskegon Chronicle reports:
  • The Ottawa County Register of Deeds office is encouraging everyone in the county who owns land to sign up for a simple program that might save property owners thousands of dollars and years of aggravation. The program, Property Fraud Alert, allows those registered to be notified every time a property with their name on it is registered with the county. “Most people don’t realize that property and mortgage fraud is the fastest growing white-collar crime in the country according to statistics provided by the FBI,” said Ottawa County Register of Deeds Gary Scholten. [...] “It’s like a smoke detector for your property,” Scholten said.

***

  • Scammers usually record a fraudulent quit-claim deed with a county register of deeds office, complete with the all of the legal transaction information and forged signatures and then let it sit for several weeks unbeknownst to the property owner. “Then, the scammers go to a local bank and apply for a mortgage for upgrades to the home and often walk away with $100,000 or more,” said Ernest Riggen, chief executive officer of the Fidlar Technologies.(1)

  • While the real owner of the property does not owe the money, the bank or mortgage company often comes after the homeowner and tries to collect the money the bank has now lost. It can cost the homeowner thousands of dollars to get the matter resolved. It is a lot like identity theft.” Often, Fidlar said, scammers hit the homes of “snowbirds” who are gone for months at a time and don’t know there is a problem until it is too late.

For the story, see Ottawa County launches new program for property owners (Electronic recording system one of three operating in Michigan counties).

(1) Even if cases like this result in successful criminal prosecutions against the scammers, the burden typically remains on the victimized property owner to file a civil lawsuit to establish that the forgery occurred in order to void or cancel both the illegal title transfer and any fraudulently-obtained mortgage scored by the scammer, thereby quieting the title to the property in the rightful owner's name.

Florida Man Faces Charges Of Swindling Elderly Dementia-Stricken Couple In Alleged Home Repair Ripoff

In Hernando County, Florida, the St. Petersburg Times reports:
  • A Spring Hill man has been accused of swindling an elderly couple suffering from Alzheimer's disease out of more than $1,000 for home repairs that he never did, according to the Hernando County Sheriff's Office. John Elmer Baker Jr., 34, was served with a warrant in Pasco on Monday and transported to the Hernando County Jail, where he was arrested Tuesday. He remained behind bars Wednesday in lieu of $10,000 bail. "Unfortunately, there are people out there who specifically prey on the elderly," said Lt. Cinda Moore, a spokeswoman for the Hernando County Sheriff's Office.

***

  • Investigators determined that Baker "apparently realized the mental state of the (victims) and exploited this by returning several times and obtaining money under false pretenses" and that his "services were never needed but due to the mental deficiencies of the (victims) the suspect was allowed to complete work that he apparently solicited."

For more, see Man swindled elderly couple with Alzheimer's, Hernando authorities say.

Tuesday, January 05, 2010

New State Law May Help Nevada Homeowner Hammer Lender, Others For Trashing Home Misidentified As Foreclosure

In Las Vegas, Nevada, the Las Vegas Sun reports:
  • A Las Vegas woman whose condo was mistakenly emptied in a bungled foreclosure action could be the first person to benefit from a new state law. [...] A crew that clears out foreclosed properties had been sent into [Nilly] Mauck’s condo by the Brenkus Team, a Henderson real estate group. Brenkus has accepted responsibility, saying it was just a mix-up. The foreclosure was a neighboring condo unit.

***

  • It all appears to add up to a solid lawsuit for Mauck, and she has a law that took effect Oct. 1 that will work in her favor. Under the state’s old law for a case like hers, aggrieved homeowners could collect triple the amount of damages only for the real estate — for the loss of the property if it was sold out from under the real owner or for loss of use of the property if the real owner was locked out, or if the building itself was damaged, for example. The change allows for triple damages for personal property. So Mauck could be awarded three times the value of what was removed from her condo.(1)

For more, see They foreclosed on the wrong house (A neighboring property was going into foreclosure, but her condo was cleaned out. A new law might help).

(1) According to the story, the lawyer representing Brenkus in Mauck’s case is Albert Marquis, who ironically, was the attorney who represented a Las Vegas couple in a high-profile foreclosure mix-up a few years ago — the one that spurred the Nevada Legislature and Gov. Jim Gibbons to approve the new law. The couple, Gerald and Katrina Thitchener, were mistakenly placed on a foreclosure list in 2002 and were out of town when their residence was cleaned out. They won a $3.1 million judgment against Countrywide Home Loans, but that award was reduced by the Nevada Supreme Court. The high court disallowed the tripling of damages for the loss of personal property. For the Nevada Supreme Court ruling in that case, see Countrywide Home Loans v. Thitchener, 192 P.3d 243; 2008 Nev. LEXIS 79; 124 Nev. Adv. Rep. 64 (September 11, 2008).

Tensions Escalate As Mortgage Insurers Stiff Lenders On Policy Claims On Defaulted Home Loans Allegedly Originated Through Fraud

In San Francsico, California, Insurance Networking News reports:
  • Bank of America Corp.'s lawsuit against MGIC Investment Corp. reflects escalating tensions in the industry over mortgage insurers' denials of claims that lenders submit for defaulted home loans. In a complaint filed in the Superior Court of California for San Francisco, B of A alleged that MGIC is denying "millions of dollars in valid mortgage insurance claims" the lender has submitted. A spokeswoman for B of A would not elaborate on the dollar amount of claims in dispute.

***

  • B of A alleged that MGIC "has adopted unreasonable interpretations of its mortgage insurance policy language to justify its failure to pay claims" because of steep losses during the downturn. The Charlotte banking company asked the court to determine the appropriate interpretation of terms of its policies with MGIC. Among other things, B of A said, MGIC has improperly taken the position that the lender must prove it was not aware of an alleged borrower misrepresentation to avoid rescission of a policy.

For more, see B of A Suit Against Mortgage Insurer Shows Growing Rift.

More On Mortgage Lender's Employee Who Was Allegedly Fired For Speaking With Law Enforcement About Fraud-Laced Home Loan

In Denver, Colorado, another story on former Aurora Loan Services' quality control employee Michael Walker was published in The Denver Post:
  • His job was to uncover mortgage fraud. But he claims he was fired for doing it. In a lawsuit recently filed in Denver District Court, he claims Lehman's mortgage subsidiary wanted to remain profitably unaware of fraud.

  • Aurora Loan Services is a subsidiary of Aurora Bank FSB, a $4.7 billion savings and loan based in Wilmington, Del., that used to be called Lehman Brothers Bank. Aurora and its affiliates weren't part of Lehman's bankruptcy filing. But Aurora Loan Services made all kinds of exotic loans — Alt-A, Alt-B, subprime — for Lehman to wrap into securitized bundles. This contributed not only to Lehman's demise, but what almost became the next Great Depression, the lawsuit alleges.(1)

  • The case "is yet another example of a mortgage industry that believes it is above the law," said Walker's attorney, Mari Newman of Killmer Lane & Newman LLP in Denver. "Apparently, Aurora Loan Services was more interested in concealing potentially fraudulent loans than it was in allowing an honest and hardworking employee to respond to legitimate requests from federal law enforcement," she said.

For more, see Fired for doing his job, fraud finder sues.

(1) According to the story, Aurora made its loans through independent mortgage brokers, who often didn't have to meet any criteria to be brokers, not even criminal background checks in some cases. Inevitably, some percentage of the mortgage applications they took would be laced with fraud, the story states. But like everyone else, they reportedly got paid by loan volume, not by loan quality.

Closing Agent Loses State License After Conviction For Forgery, Swindle; Admits Buying House With $300K+ Drawn From Title Company-Employer's Accounts

In St. Paul, Minnesota, the Minneapolis Star Tribune's The Whistleblower blog reports:
  • The Minnesota Department of Commerce revoked a Rosemount woman’s insurance license and notary commission and fined her $100,000 after she pleaded guilty to felony forgery and theft by swindle, according to an order signed Dec. 1. In May, Patrice Pouliot pleaded guilty to forging signatures on 38 checks while working for Title One, Inc., a title company. Pouliot deposited the checks, totaling $63,316.65, into her own bank account.

  • Prior to working for Title One, Pouliot worked for Midwest Guaranty Title Company. She admitted to buying a house during her employment there by falsifying closing documents and paying the seller $308,760 from Midwest Guaranty’s accounts, rather than using her own money.

  • Pouliot, 46, is currently serving a 17-month sentence at the women’s prison in Shakopee.

Source: Public record: Insurance license revoked after forgery and swindle.

Maryland Couple Faces Foreclosure After Closing Agent Allegedly Fails To Pay Off Existing Mortgage In Home Refi; Others Find Themselves In Same Shoes

In Owings Mills, Maryland, WBAL-TV Channel 11 reports:
  • A local family who refinanced their home said they found out their original mortgage was never paid, and before they could get the problem resolved, the title company that did the leg work went out of business. According to state records, Maple Leaf Title Company had been in business since March 1999. But after August 2009, the company could not legally operate in Maryland because it did not renew its license.

  • "We get closer and closer to foreclosure, so it's stressful for us, because in a month we may have our house going up for auction," said Owings Mills resident Jim Wilkerson. The Wilkerson family recently received a notice to foreclose from a bank that they believed they had paid. This past summer, the couple refinanced their home and thought everything was fine until they started getting statements from two banks. They said they found it difficult to get answers.

  • "I think that's been the most shocking. When we refinanced, you never think you're putting everything at risk until that check makes it from the title company to your lender," Jen Wilkerson said.

  • The Wilkersons said they have plenty of questions for Maple Leaf Title, and so do other customers of the title company. All said they want to know what happened to the money that was supposed to pay off their original mortgages. The 11 News I-Team found Maple Leaf's offices closed and the phone disconnected. Company President Anthony Weis only told the I-Team to talk to his attorney, with whom reporter Barry Simms was not able to get in touch.

  • The I-Team discovered that a title insurance company is suing Maple Leaf. According to a civil lawsuit, Fidelity National Title Insurance asked Maple Leaf to terminate an agreement on Oct. 2, but then on Oct. 20, Fidelity National learned of a $600,000 misappropriation of funds by a former Maple Leaf employee. Maple Leaf took no action and did not report the theft to police, according to the lawsuit. On Oct. 21, Fidelity National discovered $3.3 million was missing from another escrow account.

  • The Maryland Insurance Administration regulates title companies and said it couldn't say if they were investigating the case. "I can't talk about our investigative activities. I can tell you that any consumers that have been harmed or fear they've been harmed, we urge them to contact us," said Maryland Insurance Commissioner Ralph Tyler. Tyler said in the past few years, his office has noticed an enormous increase in similar complaints of alleged theft of funds as the economy slowed.

Source: Family: Title Co. Never Paid Our Mortgage (Title Company Has Since Gone Out Of Business).

Monday, January 04, 2010

Assembly Line Foreclosure Mills Dominate Fla. Law Market For Home Repo Suits; Judge Exoriates Law Firm, Wells For Mindlessly Cranking Out Legal Papers

In Tampa, Florida, the The Tampa Tribune reports:
  • Few areas of the legal field are so dominated by a handful of players as foreclosure law. Florida Default Law Group is one of four foreclosure mills operating in Florida that appear to be winning the lion's share of business from lenders or their representatives. Along with Florida Default, other big firms include the law offices of David J. Stern in Plantation, the law offices of Marshall C. Watson in Fort Lauderdale and Shapiro & Fishman in Boca Raton.

  • The Tribune looked at 1,994 initial foreclosure documents filed in October to see which firms were handling the most foreclosures. Combined, those four industry heavyweights filed 1,049 foreclosure cases in October, or 53 percent of all new foreclosures filed in Hillsborough County that month. Florida Default filed 323 new foreclosure cases in October, second only to the 352 cases filed by David J. Stern. Florida Default operates in Florida's 66 other counties, the firm's managing partner testified in a court deposition.

  • To handle the workload, foreclosure mills have developed a common model: use lower-paid paralegals and support staff for much of the routine legwork, and hire young lawyers to sign off on the lawsuits and handle complications.

***

  • John Olson, a U.S. Bankruptcy Court judge in Fort Lauderdale, had no problem taking Florida Default and a big client, Wells Fargo, to task. After the firm made errors in up to 50 cases in court, Olson called out the firm in October 2008 in a strongly worded opinion. Florida Default made the errors when an employee pulled information from the wrong computer screen, according to court documents. Florida Default and Wells Fargo "have engaged in the systematic process of churning out unrefined and unexamined form pleadings, instead of producing and filing carefully considered legal papers," Olson wrote.(1)

For more, see Law firm gorges on home defaults (Florida Default and Wells Fargo "have engaged in the systematic process of churning out unrefined and unexamined form pleadings, instead of producing and filing carefully considered legal papers," a bankruptcy judge wrote).

(1) In Sarasota County, Lee Haworth, chief judge in the state's 12th Judicial Circuit, started noticing a trend in foreclosure filings: Foreclosure law firms would start a foreclosure lawsuit against a homeowner but push it to the back burner if complications arose. Meanwhile, the stalled cases began to languish in Sarasota and Bradenton courts, the story states. Foreclosure mills seemed to think pursuing such cases was too much trouble for the $1,200 fee, he reportedly said.

Rhode Island Lawyer Suspended From Practice For Forging Client's Name On Satisfaction Of Mortgage & Failing To Pay Off Debt

In Providence, Rhode Island, The Providence Journal reports:
  • The state Supreme Court has barred Newport lawyer John T. Sheehan from practicing law indefinitely for violating a court order that he repay a loan to a former client. The court also suspended Sheehan’s law license for 42 months upon the resolution of that matter for a series of disciplinary infractions.

***

  • Sheehan asked client Mona Woo in 2006 to loan him $50,000, saying it would be secured by a mortgage on a Providence property. Sheehan executed a promissory note agreeing he would repay the loan, plus 12 percent interest, in monthly increments of $500. Sheehan also executed a mortgage deed in Woo’s name on the 61 Bergen St. property in Providence.

  • In September 2006, the owner of that property, Bergen 59 Associates, sold 61 Bergen St. Sheehan, at the time, was named as managing partner of Bergen 59 Associates. Sheehan provided the buyer’s lawyer with a “discharge of mortgage” purportedly signed by Woo that released her interest in the property. Woo did not sign the discharge, and Sheehan later admitted he signed her name without her knowledge or consent, the court said.(1) Sheehan did not tell Woo the property had been sold, or that Bergen 59 Associates received $27,725 in net proceeds from the sale. He did not give her money from the sale and continued to make sporadic $500 monthly payments.

For the story, see Newport lawyer barred from practicing law.

(1) Reportedly, Sheehan, said the court, violated court rules of conduct by not informing Woo to seek independent professional advice before loaning him money and by failing to get her consent before selling the property. In addition, he engaged in dishonest conduct by forging her name and falsely notarizing her forged signature, the story states.

Alleged "Ghetto Loans" Peddler Hit With Another Fair Housing Suit; Memphis, Shelby County Claim "Reverse Redlining" In Making Predatory Mortgages

In Memphis, Tennessee, The Commercial Appeal reports:
  • The city of Memphis and Shelby County, joining a host of governments across the country hit hard by the foreclosure crisis, filed a federal lawsuit [last] Wednesday against financial services giant Wells Fargo. The suit alleges that "unlawful, irresponsible, unfair, deceptive and discriminatory" lending practices by Wells Fargo in Memphis and Shelby County violated the Fair Housing Act.(1)

  • "We're here because we want to go on record affirming our belief that the unfair lending practices that have wreaked havoc on individuals and families have also impacted the larger community," said Mayor A C Wharton during a news conference at the National Civil Rights Museum. "Many of the bad loans that have been doled out by unscrupulous lenders have been like giving families boats with crepe-paper bottoms. No bucket brigade and no amount of hard work can keep you from sinking in a vessel that is doomed from the very start."(2)

***

  • The complaint unveiled Wednesday includes testimony from two former high-ranking Wells Fargo employees involved in [a] Baltimore suit [accusing Wells Fargo of similar conduct] who say Wells Fargo intentionally made bad loans to African-Americans. The employees, who worked out of Virginia and Maryland but are knowledgeable about the company's national lending practices, said Wells Fargo marketed subprime loans to predominantly African-American ZIP codes and that company officials referred to the loans as "ghetto loans." The complaint also says Wells Fargo steered black clients who qualified for prime loans into more costly subprime loans, which produced greater profits for Wells Fargo and its agents.

***

  • "They know how to make good loans, yet they aren't making them in the black community," said John Relman of Relman & Dane, the Washington-based firm that is representing the city and county in the lawsuit, along with [Webb] Brewer and Steve Barlow. Relman & Dane also represents Baltimore in its suit.(3) "They did it because they could make more money," said Relman. "They made the money and let Memphis and Shelby County hold the bag."(4)

For the story, see Memphis, Shelby County sue Wells Fargo over lending practices (Allege actions violated Fair Housing Act).

For the lawsuit, see City of Memphis & Shelby County v. Wells Fargo Bank N.A., et al.

See also:

Go here for other posts on Wells Fargo and its alleged ghetto loans peddling.

(1) According to this report, so many homes are lost each year in Memphis to foreclosure sales that occur on the Shelby County Courthouse steps that the problem attracted national attention last year. A film crew for the PBS television show “NOW with David Brancaccio” came to Memphis and studied the problem, talked to politicians such as Shelby County Mayor A C Wharton Jr. and even ventured out to foreclosure hotspots like Frayser. Go here for the video of the PBS' NOW program on the foreclosure problem in Shelby County, and here for the transcript of the NOW program.

(2) According to another report, Mayor Wharton was quoted further:

  • These are very astute people who knew the difference between a good loan and a bad loan. Sure, there was federal pressure to make loans to groups who were customarily ‘non-banked,’ as we often say, who didn’t have access to traditional credit. Sure, and that’s a good motive. But, as is the case with most federal programs, there’s going to be abuse. And we think that this is one instance in which what was intended for good was exploited to be used for ill.”

(3) For the City of Baltimore lawsuit, see Mayor and City Council of Baltimore v. Wells Fargo Bank N.A. et al.

This story adds that Illinois Attorney General Lisa Madigan also filed a lawsuit last summer accusing Wells Fargo of marketing high-cost mortgage loans to black and Latino customers while selling lower-cost loans to white borrowers with similar incomes. The cumulative effect, Ms. Madigan argued, was to turn the black and Latino neighborhoods of the nation’s cities “into ground zero for subprime lending.” See:

In addition, in March, 2009, the National Association for the Advancement of Colored People ("NAACP") also filed suit against Wells Fargo alleging systematic, institutionalized racism in sub-prime home mortgage lending. See:

(4) For related links on the problems in the subprime mortgage market, see:

Vegas Homeowners Hit BofA With Lawsuit Seeking To Halt Foreclosures/Evictons & Force Lender Into Good Faith Negotiations On Loan Modifications

In Las Vegas, Nevada. KLAS-TV Channel 8 reports:
  • A group of homeowners on the brink of foreclosure has formed a class-action lawsuit against their lender Bank of America. That lawsuit -- which represents 50 homeowners -- accuses the bank of wrongful foreclosure, breach of contract, and unfair lending practices.

  • According to federal law, lenders that accepted government bailout funds are required to take part in good faith negotiations with homeowners who are at imminent risk of default. But after months of getting nowhere with their lender, dozens of homeowners say they are now suing Bank of America in an attempt to force them to follow the law.

***

  • Las Vegas attorney Matthew Callister has filed a class-action lawsuit on behalf of more than 50 homeowners against Bank of America. "We've been compelled to bring a series of class action suits to put a proverbial gun to the head of the lending institutions to force them to do what they are already obligated to do," said Callister.

  • He is also pushing for a hearing before a judge as soon as possible to get an injunction or stay to postpone any foreclosures and evictions against the homeowners taking part in the class-action suit. Callister also has a suit against IndyMac on behalf of about 60 homeowners. He also plans to file suits against Chase Bank and Wells Fargo Bank in the near future.

For the story, see Las Vegas Homeowners in Default File Suit Against Bank.

Sunday, January 03, 2010

New Hampshire, California Chief Justices Call For "Limited-Scope Representation" In Effort To Assist Pro Se Litigants Navigate Through Court System

John T. Broderick Jr. and Ronald M. George, the chief justices of the New Hampshire and California Supreme Courts, respectively, wrote in The New York Times recently, calling for promoting efforts to close the “justice gap” for litigants in civil cases who cannot afford a lawyer, and either do not qualify for legal aid or are unable to have a lawyer assigned to them because of dwindling budgets.
  • One such effort involves the “unbundling” of legal services. Forty-one states, including California and New Hampshire, have adopted a model rule drafted by the American Bar Association, or similar provisions, which allow lawyers to unbundle their services and take only part of a case, a cost-saving practice known as “limited-scope representation” that, with proper ethical safeguards, is responsive to new realities.

  • Traditionally, lawyers have been required to stay with a case from beginning to end, unless a court has excused them from this obligation. Now, in those states that explicitly or implicitly allow unbundling, people or businesses can hire a lawyer on a limited basis to help them fill out forms, to prepare documents, to coach them on how to present in court or to appear in court for one or two hearings.

For more, see A Nation of Do-It-Yourself Lawyers.

See also, The Business Insider: Judges Argue For Assistance For The Do-It-Yourself Lawyer.

Woman Loses Life Savings In Alleged $31M Ponzi Scheme That Bilked Investors Through Forged Deeds, Sale Of Same Lots To Multiple Victims

In Pocatello, Idaho, the Idaho State Journal reports:
  • One of the victims of an alleged Ponzi scheme that used a Pocatello property as part of an elaborate scam to bilk investors of $31 million said she lost a six-figure sum. “I was absolutely devastated,” Carolyn White said about the moment she realized [her] savings was gone. “I had to take sleeping pills that night. I lost everything.”

  • White “owned” 12 of the 70 lots at the 16.5-acre mobile home subdivision on Philbin Road that was used as part of the scheme. Or so she thought. It turns out most of the title deeds issued to the 400 investors affected by the scheme are worthless because they were forged or deeds for the same lots were sold to multiple investors. [...] The alleged scheme involved purchasing existing mobile home parks and converting them to mobile home subdivisions by dividing them into individual lots.(1)

For more, see Alleged scam cost woman her life savings.

(1) The owners and operators of Valley Investments of Grand Junction, Colo., Philip R. Lochmiller, 61, and his son, Philip R.Lochmiller II, 38, as well as a company employee, Shawnee N.Carver, 33, were indicted by a federal grand jury in Denver Dec. 15 on conspiracy and fraud charges. According to one investor, at least one affected investor has committed suicide because of the alleged scam, an earlier story reports. See $31 Million scam: Pocatello property used in alleged Ponzi scheme.

California Man Surrenders Real Estate License Amid Allegations Of Pocketing Upfront Fees On Loan Modifications, Failing To Properly Handle Trust Funds

From the California Department of Real Estate:
  • Whitfield Financial Services Inc. (Whitfield), which operated a statewide loan modification business, surrendered its real estate license in lieu of defending accusations of violations of the real estate law at an administrative hearing. The license surrender, effective December 21, 2009, effectively puts Whitfield and its designated broker, Raymond Lorenzo Jeter (Jeter), out of business.

  • The license surrender comes on the heels of an accusation filed against Whitfield and Jeter by the California Department of Real Estate (DRE) accusing the licensees of failing to properly handle trust funds and illegally collecting advance fees in connection with loan modification services. Jeter was also separately accused of failing to exercise proper supervision over the activities of Whitfield. While Jeter admitted no wrongdoing by either himself or Whitfield for purposes outside of the DRE action, he nonetheless surrendered all license rights and can no longer engage in real estate brokerage activity, including loan modifications.(1)

For the press release, see California Department of Real Estate Shuts Down Loan Modification Company (Loan Modification Firm Surrenders License).

(1) Consumers who have been cheated out of money by Whitfield, Jeter, or any other licensed California real estate agent may be eligible to put in a claim with the Real Estate Recovery Account, a victim's fund administered by the California Department of Real Estate. According to its website, if a claim is granted, the applicant will be paid an amount for his or her actual and direct loss in a transaction, up to a statutory maximum of $50,000 per transaction, with a possible total aggregate maximum of $250,000 per licensee.

Idaho AG Settles Allegations With NJ Upfront Fee Loan Modification Outfit; Firm To Cough Up $19K In Refunds To 12 Homeowners

In Boise, Idaho, The Associated Press reports:
  • Attorney General Lawrence Wasden says Idaho homeowners who were duped into paying a New Jersey company to help them modify their mortgages will get more than $19,000 in a settlement. Wasden says the investigation into Weston, New Jersey-based Best Interest Rate Mortgage Co. LLC began with a complaint about a direct-mail advertisement.

  • The ad offered a special loan modification programs as part of the "Economic Stimulus Act of 2008" and appeared to have come from the U.S. government. The attorney general's office says the company charged Idaho homeowners upfront fees ranging from $1,000 to $1,800 before the mortgage modifications were completed, which Idaho law prohibits. The company, which has denied wrongdoing, was ordered to pay the 12 homeowners $19,710.

Source: Idaho AG: Cheated Homeowners Get $19K Settlement (Idaho's attorney general says homeowners win $19,000 in settlement with New Jersey company).

Saturday, January 02, 2010

Washington Man Cops Plea To Theft; Pocketed $22K+ By Selling Home In Foreclosure, Failing To Pay Mortgage; Unwitting Buyers Failed To Check Title

In Douglas County, Washington, The Wenatchee World reports:
  • A Wenatchee man pleaded guilty to third-degree theft for taking more than $22,000 in payments from a couple for a home he had no title to. Felix Hernandez Martinez, 25, originally charged with first-degree theft in January 2008 in Douglas County Superior Court, pleaded guilty Dec. 21 to the amended charge and was sentenced to 365 days imprisonment with 362 days suspended.

***

  • The husband and wife in July 2007 signed a purchasing agreement with Hernandez for an East Wenatchee home for $180,000, according to an investigation report, compiled by Detective Dan Dieringer with the East Wenatchee Police Department. Dieringer wrote that the couple gave Hernandez $700 in earnest money, and between July and December of that year, had paid Hernandez $22,500 total in cash payments. The report said no documents from the sale were filed or recorded with the court or the auditor’s office.

  • The report said the couple moved into the home in August 2007 and that they never obtained a title check on the residence to determine whether Hernandez had a clear title to the property. In December of that year, Northwest Trustee Services conducted a foreclosure sale of the East Wenatchee property on behalf of Wells Fargo Bank because of a mortgage default by Hernandez, the report said.

For the story, see Man pleaded guilty to selling home already in foreclosure. rent to own lease purchase option scams yellowstone

Lender's Credit Reporting Error On Paid Off Car Loan Puts Kibosh On Consumer's Home Refinancing Plans

In Winnipeg, Manitoba, CTV News reports:
  • A credit report mistake made by a financing organization has cost a Manitoba family thousands of dollars and has cast a cloud over its Christmas. In June 2008, Nancy Klassen, who lives near Morris, says her family paid off a GM minivan. But when they went to get a lower interest rate on a home they've lived in for 16 years, they were denied.

  • The family found out GMAC Financial had put a mark on its credit report saying they were in arrears on car payments, says Klassen. "We paid...and we paid early," says Klassen. With such a bad credit score, the Klassen family could only get a mortgage at 15 per cent, paying more than $1,500 each month. After months of corresponding with GMAC Financial, the group admitted to the family it made a mistake but will not give compensation until a new mortgage is secured.

For the story, see Credit report error sets family back thousands of dollars.

Repeatedly-Failing Air Conditioner Marks Beginning Of Journey On Rocky Road For One Florida Family

In Manatee County, Florida, the Bradenton Herald reports on the problems faced by local couple Joe and Brittany Baker after a May 2009 repair visit by a service technician mentioned that Chinese drywall might be the culprit for the repeated air conditioner problems in their recently-constructed home. The suspicion was reportedly confirmed a few days later by a home inspector.

  • That was enough to convince Brittany Baker, eight months’ pregnant at the time, to move in with her in-laws while Joe Baker was undergoing U.S. Army training in Colorado. The stress would only escalate, Brittany Baker said.

  • At first, she worried the drywall would affect her unborn baby’s health. “Luckily she’s healthy,” Brittany Baker said.

  • There was the struggle to get the builder, deMorgan Communities, to admit it has used Chinese drywall in the Bakers’ house — followed by its contention that it, too, was a victim and couldn’t do anything for the Bakers.

  • There were the break-ins — at least five, by Brittany Baker’s count — at the unoccupied house, with thieves taking everything from leftover food to camping gear. A neighbor who interrupted one burglary found the thieves had left behind suitcases full of items, including an urn containing her father’s ashes. "That was the biggest stress, the house being broken into over and over,” she said.

  • Then there were the financial worries. The Bakers wondered if they could continue to keep paying the mortgage on a home they no longer felt safe to live in and, if they couldn’t, whether it would jeopardize Joe Baker’s security clearance and assignment to MacDill Air Force Base. After making arrangements with the Army, the Bakers stopped paying the mortgage and moved into the rental house last month. “We really can’t afford to rent a house and pay the bills and pay a mortgage on top of it, but we have to, to make sure our daughter is safe,” Brittany Baker said.

  • Like many others, the Bakers hope to get some relief through the courts. They are among more than 2,100 homeowners who are suing Knauf Plasterboard Tianjin Co. Ltd, a Chinese drywall manufacturer, and more than 600 homebuilders, suppliers, distributors and installers in the massive federal class-action lawsuit. More than 30 Manatee homeowners are among the plaintiffs, and deMorgan is among the defendants. The case is expected to go to trial in March as part of a series of bellwether cases designed to narrow legal issues such as liability.

For the story, see Drywall keeps owners in limbo.

Friday, January 01, 2010

Deteriorating Conditions Threaten Tenants With Loss Of Homes As Another Apartment Building Faces Foreclosure

In St. Paul, Minnesota, KARE-TV Channel 11 reported last week:
  • Melting snow has created a big problem for residents at 1015 York Avenue. Not only is the property in foreclosure, but residents are tired of reoccurring problems. "Water has leaked into nine apartments here," Saint Paul Fire Marshal Steve Zaccard says.

  • The looks and sounds of things proved it wasn't much of a Merry Christmas for some families. "I've been crying all morning, so I'm tired of it," Lorraine Wilson says. "We had all the food on the table, we were sitting and eating and all of a sudden it starting dripping, falling from the ceiling."

  • The snow, rain and ice from the last few days was just too much for the roof above them. The pipe that drains water from the roof froze, leaving the standing water with no where to go but down and through the ceilings. "To be paying rent you shouldn't have to live like this," Wilson says.

For more, see Residents chose to stay despite mold warnings. RentSigmaSkimming

New York Chief Judge On Courts & Recession-Related Cases: "We Are The Emergency Room For Society"

In New York City, The New York Times reports:
  • New York State’s courts are closing the year with 4.7 million cases — the highest tally ever — and new statistics suggest that courtrooms are now seeing the delayed result of the country’s economic collapse. [...] And the increase in New York offers a preview of the recession-related cases showing up in courts across the nation.

  • New York’s judges are wading into these types of cases by the tens of thousands, according to the new statistics, cases involving not only bad debts and soured deals, but also filings that are indirect but still jarring measures of economic stresses, like charges of violence in families torn apart by lost jobs and homes in jeopardy.

***

  • Society’s problems come to us,” New York’s chief judge, Jonathan Lippman, said. “We are the emergency room for society.” [...] Judge [Anil C.] Singh of the [Manhattan] Civil Court said that, from his bench, it was hard to see signs of a recovery. “I would describe it as a train wreck,” he said, “and I think it’s going to get worse for the next couple of years.”

For more, see The Recession Begins Flooding Into the Courts.

Bank Liable For $400K For Failing To Disclose Contamination Of Property Sold To Local Couple

In Kalkaska County, Michigan, the Traverse City Record Eagle reports:
  • A Kalkaska County jury ordered a local bank to pay a Williamsburg couple $400,000 after the bank allegedly failed to disclose contamination on property the couple purchased. Larry and Theresa Lelito bought a 5-acre parcel on M-72 just west of Kalkaska from Alden State Bank in December 2003. The Lelitos later discovered it was contaminated with trichloroethylene (TCE), and sued the bank for fraud.

***

  • The Lelitos bought the parcel for $150,000 and subsequently spent $300,000 to construct an office building there. The property's previous owner told Larry about the contamination in 2006, said the Lelitos' attorney, Robert A. Steadman. [...] Steadman said the property's previous owner testified during trial that he told the bank about the contamination, though bank officials testified they didn't remember that conversation.

For the story, see Couple awarded $400K in suit against bank (Suit alleged bank failed to disclose contamination).

Thursday, December 31, 2009

Title Agents Ripped Off $700K In Closing Proceeds, Says Prosecutor; Late/Foreclosure Notices Tip Off Unwitting Homeowners Of Alleged Theft

In Freehold, New Jersey, the Asbury Park Press reports:
  • A Monmouth County grand jury has handed up an indictment accusing two sisters who ran a pair of Freehold title agencies of pocketing more than $700,000 from clients and using the money to buy luxury cars and travel. Rebecca Marchese-DePeri-Grande, 37, of Jackson and Meredith Miller, 34, of Brick were arrested Monday following the indictment.(1) The pair had been under investigation since 2005 after authorities received complaints from customers of both the R.M.J. and Spectrum title agencies, according to a statement issued by Monmouth County Prosecutor Luis A. Valentin.

***

  • According to Valentin, the pair used money from various escrow accounts associated with the businesses that was supposed to be turned over to banks for cover closing costs and refinancing fees was instead used to purchase Ferraris, lavish homes and travel. The total amount of the alleged theft is about $786,000, and at least 15 victims have been identified, Valentin said.

  • Customers of the businesses — neither of which is currently conducting business — initially discovered the missing money after they began receiving late notices and foreclosure notices from lenders.

For the story, see Monmouth County grand jury indicts sisters on theft, conspiracy charges.

For the Monmouth County DA press release, see Two Title Agency Owners Indicted in Connection with Theft of Over $780,000 from Clients.

(1) According to the story, both women are charged with second-degree counts of conspiracy, misappropriation of entrusted property, theft by failure to make a required disposition and misconduct by a corporate official. Additionally, Miller is charged with theft by deception and two counts of writing bad checks, the story states. EscrowRipOffKappa

Utah Woman Charged With Filing Phony $1M Lien On Home Of Boyfriend's Deceased Wife; Pair Attempted To Rip Off Estate's Heirs, Investigator Says

In Utah County, Utah, Deseret News reports:
  • A Pleasant Grove woman accused of working with [...] boyfriend [Martin MacNeill] to steal his adopted daughter's identity faces criminal charges. Gypsy Willis, 33, was charged [...] in 4th District Court with one count of identity fraud, two counts of false and inconsistent material statements and one count of wrongful lien.

***

  • When MacNeill's wife passed away, the house had been in her name, said Doug Witney, the lead investigator in the case. He said MacNeill had not wanted to go through probate or pay taxes, so instead acted as his deceased wife's attorney, pretended she was still alive and had the property transferred to his name.

  • The same day the transaction went through, Witney said, Willis filed a $1 million lien on the house, which is illegal because there was no reason to file the lien. Witney said it was probably done to discourage MacNeill's children from claiming rights to the house because one of his daughters was trying to obtain custody of her three adopted younger sisters at the time. When the federal government realized what was going on, it had an agent act as an intended buyer of the house and a few days after Willis went to remove the lien, she and MacNeill were arrested.

For the story, see Pleasant Grove woman charged in identity theft case. DeedContraTheft deed theft

Woman Accused Of Abusing POA By Misspending Institution-Bound Dad's Money; Gov't May Seize Family Home To Cover Nursing Home Bills

In Elkhorn, Nebraska, WOWT-TV Channel 6 reports:
  • Regina Garcia has power of attorney over her father’s retirement fund. Now she needs an attorney after being charged with misspending almost $16,000 of that money. [...] Garcia’s elderly father is an Alzheimer’s patient who owes nearly $20,000 to an Elkhorn nursing home. She’s accused of using his retirement money to pay her own bills instead of his.

  • Douglas county attorney Don Kleine said, “They’re being taken advantage of, they’re being exploited by someone who understands they have this amount of money and take it from them not for the benefit of the person who has the incapacity but for themselves.”

***

  • The county attorney is concerned that if Garcia’s father can’t pay his nursing home bill then taxpayers will have to pick up the cost. Garcia claims the government is in the process of seizing her father’s home to pay for his nursing home cost. If convicted of the charge of Abuse of a Vulnerable Adult she faces up to five years in prison.

For the story, see Daughter Charged With Stealing Dad's Retirement (Nursing home bill past due).

Real Estate Agent Accused Of Sleazy Practice In Alleged Attempt To Illegally Force Renter Out Of Foreclosed New Jersey Home

In Wildwood, New Jersey, The Philadelphia Inquirer reports:
  • On Memorial Day weekend, a man knocked on the door of Sheila Walker's Wildwood apartment and presented her with an offer: $1,500 to vacate in three weeks. The three-unit building had been seized in foreclosure. According to Walker, 45, neither the man nor the real estate office he represented ever told her that New Jersey law gave her the right to stay put.(1) She panicked, she said. How would she find an affordable place at the start of the busy summer season?

***

  • "She was just beside herself," said Donna Jago, director of citizen relations [for New Jersey's Department of the Public Advocate], who first spoke with Walker in July. "She didn't know where to turn, and she was dealing with a Realtor that was giving her misinformation."

  • Walker said that the office of Jean Ball, a RE/MAX agent in Northfield, told Walker to stop paying her $750 rent as part of the cash-for-keys deal. In August, Walker was served an eviction notice for failure to pay rent. She said she felt duped. Ball would not comment for this story. Her online profile says she specializes in bank-owned properties in South Jersey. [...] Because Walker had receipts showing that she had paid her rent on time, Jago said her office was able to get the eviction dismissed.

  • Jago said Walker's case was not unusual. She has helped others who faced unlawful evictions. "Some of these Realtors, I think they know exactly what they're doing," Jago said. "Some of them don't."

For the story, see New rules seek to protect tenants.

(1) New Jersey's laws are stricter than those in most states. They forbid the eviction of tenants - with or without a lease - from foreclosed buildings without cause, such as failure to pay rent or occupancy by a new owner, the story states. See also: Foreclosure Eviction Of Residential Tenants "Almost Always Illegal In New Jersey," Says State Public Advocate.