Saturday, May 08, 2010

Condo Converter Accused Of Unloading Mold-Infested Apartments On Unwitting Buyers, Leaving Unit Owners With Unaffordable $4M Remediation Price Tag

In Redmond, Washington, KOMO-TV Channel 4 reports:
  • What many thought would be a dream condo ended up instead with a moldy mess. And to make things worse? The person the condo owners believe is responsible is nowhere to be found.

***

  • Thirteen homes in this community have been hit with water intrusion and mold. The problem appeared a few years ago, so homeowners commissioned an independent study. It found the problem was there since the apartments were converted to condos in 2006, and should have been fixed then.

  • We tried tracking down the developer, which was an LLC out of Las Vegas. It has since been dissolved, according to state records. Sources say the owner-operator moved to Mexico when the market went soft.

  • Homeowners face a $4 million price tag to fix the place, something no one can afford. "That, on top of an underwater mortgage… it's like throwing money into a bottomless pit," said homeowner Jason Ing. One other option: walk away and let the banks foreclose. Something the Bailes family feels could be their only option. "I feel like we're getting screwed, basically," Jessica Bailes said. "The fact that we can't get a hold of this developer."

For the story, see Condo owner: 'I feel like we're getting screwed.'

Residents In Dilapidated Mobile Home Park In Foreclosure Threatened With Immediate Boot Over Unpaid Water Bill

In Jacksonville, Florida, The Florida Times Union reports:
  • Among the dozens of ravaged homes, trash piles and overflowing sewage in a once thriving Jacksonville neighborhood stand eerie monuments to a time when the streets bustled with people. [...] About 40 people, a quarter of them children, still live in the Westport Mobile Home Park on 103rd Street near Interstate 295. The JEA plans to cut water and sewer service Monday over the owners’ delinquent $4,800 account, JEA records show. The JEA told residents last week the park will then be considered uninhabitable. The city can seek to have them removed within 30 days over safety issues.

  • Poverty-sticken residents wept when asked about their future. Some vowed to stay and fight, despite being circled by squalor. Those who own their homes can’t move them because the structures are too old.

***

  • The park’s owners, including St. Augustine businessman Farid Ashdji, have faced foreclosure since May 2009 after being cited for owing $1.3 million, court records show. [...] The city has cited the owners for safety and code violations and condemned dozens of properties stripped by vandals. The owners have not responded and face fines, said Renee Brust, a city spokeswoman. Brust said the city does not relocate people but can offer temporary assistance to residents who seek help.

For more, see Jacksonville residents to lose neighborhood ('It may not look like much, but it’s a home for my babies’).

For story update, see Residents of Jacksonville mobile home park get some time (Families at the Westport Mobile Home Park faced losing water and sewer service Monday; future remains uncertain):

  • About 40 people living in a nearly destroyed Jacksonville mobile home park got a break in plans to have their water and sewer service cut next week when the owners paid a delinquent $4,800 JEA bill late [Friday] afternoon.

City Of Atlanta, Management Company Work To Relocate 180 Residents Left Stranded In Dilapidated, Foreclosed Apartment Complex

In Atlanta, Georgia, the Atlanta Journal Constitution reports:
  • Josephine Roberts has to move – right away – out of the rundown southwest Atlanta apartment that has been her home for 25 years. “It’s probably for the best,” Roberts, 65, told the AJC on Thursday after meeting with an apartment management company that is trying to relocate the 180 people stranded in the Hidden Pines apartments after the bank foreclosed on the property. “The conditions [at Hidden Pines] are not [safe] living standards. I don’t think we, as a people, should live in this type of environment… It was unbelievable.”

***

  • This property is not safe,” said Mitzi Bickers with the Mayor’s Office for human services. Bickers said city workers discovered the Hidden Pines residents when crews were dispatched to investigate reports that broken pipes were spewing untreated sewage. She said several senior citizens and pregnant women were moved Friday while the others will leave over the next few weeks.

For more, see Atlanta trying to relocate residents in foreclosed apartments.

Novice Homebuyer May Be Out $8K After Unwittingly Signing Contract Sans Loan Contingency On Foreclosure, Then Discovers Mortgage Insurance Unavailable

In Edmonton, Alberta, CTV Edmonton reports:
  • A young woman is now fighting for her life savings after a housing venture went through the cracks. Brenda Vanner says she cashed in her RRSPs [Registered Retirement Savings Plans] and her savings to make an offer on a property that was up for foreclosure. "It seemed like a good deal and a real good property to buy," she said. But days before the deal was set to close, the woman says she was denied mortgage insurance because of deficiencies on the property.

  • The 23-year-old signed a contract with no conditions, and may now be out $8,000. "I was naive. I took for granted that someone was looking out for me and I will never do it again. I just want to make sure it won't happen to someone else."(1)

For more, see Young woman fights for life savings after housing venture plummets.

(1) This story illustrates the importance of being properly advised before signing a real estate contract, as well as having the premises thoroughly inspected for defects (preferably by an inspector the buyer obtains on his/her own, not referred by anyone who has a vested interest in seeing the transaction consummated (ie. seller or commissioned real estate or mortgage broker/salesperson). For a story on what can happen when a buyer gets the wrong inspector, see Contra Costa Times: Brentwood leader's company crumbles in wake of questionable home inspections (A Brentwood councilman's contracting firm has collapsed under the weight of impending lawsuits over home inspections gone awry, underscoring the perils for homeowners and firms alike in a largely unregulated industry)).

Grant Deed Solicitation Scam Letter Targets Homeowners Facing Foreclosure

In Palm Dedert, California, California Chronicle reports:
  • Supervisor John J. Benoit [] is warning about a mailing received in the Coachella Valley [...] from the "Title Compliance Office" informing residents that, per a recommendation of the U.S. Government Federal Citizen Information Center, they should obtain an official copy of their Grant Deed by a deadline of May 24, 2010. The recipients are directed to send $167 payable to Title Compliance Office, a P.O. Box in Riverside. The backside of the solicitation is a notice printed in Spanish.

  • "This solicitation is a rip-off that takes advantage of distressed homeowners worrying and working to save their homes from foreclosure," said Supervisor John J. Benoit. "At a fraction of the cost, the Riverside County Assessor-County Clerk-Recorder's office can provide these official documents so residents would be wise to avoid this entity."

For more, see Benoit Warns About Grant Deed Solicitation Letters.

Tenant Gets 12 Years For Operating Indoor Pot Farm From Basement Of Rented Home

From the Office of the Monmouth County, New Jersey Prosecutor:
  • On April 12, 2010, Michael Papazoglou, 30, of Freehold Township, N.J., was sentenced to a 12 year State Prison term for the first degree crime of Maintaining or Operating a Controlled Dangerous Substance Production Facility. The charge stems from the November 18, 2008, arrest of Papazoglou and four others at Papazoglou’s rented Freehold residence.

***

  • The investigation revealed that Papazoglou had been growing the marijuana plants in the basement of the residence, that a decision had been made to move the marijuana plants elsewhere, and that Wheeler and Farmer were responsible for transporting the marijuana plants to the new location. On the day of the arrests, Wheeler rented the UHaul truck and traveled to Freehold where he met with Farmer, Papazoglou and another, unidentified man. The four men then loaded the marijuana plants and growing equipment into the U-Haul truck so that the production operation could be resumed at a different location.

For the Monmouth County Prosecutor's press release, see Freehold Man Receives 12 Year Prison Term For Operating A Marijuana Production Facility.

(1) On December 7, 2009, Jeremy Wheeler, 30, of Tuftonboro, N.H., and Jamil Farmer,26, of New York City, N.Y., also appeared before Judge Reisner and entered guilty pleas to second degree Possession of a Controlled Dangerous Substance With Intent to Distribute. On February 19, 2009, Wheeler was sentenced to a six year State Prison term. On January 29, 2009, Farmer was sentenced to a five year State Prison term. Based upon the factual bases provided by Papazoglou, Wheeler and Farmer during the entry of their guilty pleas, related charges against Stephanie Federico, 19, of Hoboken, N.J., and Alysson Woolley, 25, of Long Branch, N.J., which were contained in the same indictment were dismissed. marijuana grow house

Friday, May 07, 2010

New Wave Of Foreclosures Currently On Hold As Lenders Drag Feet In Dealing With Delinquent, Underwater Condo Owners

A recent column in Barron's addressed the problem of mortgage lenders dragging their feet on condominium foreclosures in order to avoid taking title to units in order to avoid becoming responsible for footing the bills for the HOA's maintenance fees:
  • IF A CONDOMINIUM OWNER is behind on his mortgage, he usually isn't paying his condo association dues either. And that, oddly, could be helping to prevent the already roaring rate of U.S. condominium foreclosures from becoming even worse.

***

  • In the most troubled markets -- think Florida, California, Nevada, Arizona and parts of the Midwest -- some condos are three years in arrears on association fees. When a bank takes ownership, it risks having to pay those fees, plus any that accrue until it resells the unit. Fourteen U.S. states now have "super lien" laws mandating that a lender pay at least part of the owed dues when it seizes a property. Ohio legislators are even fighting to make association liens in their state superior to first mortgages. In states where there's no law mandating payment, condominium associations must sue the lenders to recoup any dues shortfall, and they're not always successful.

  • For lenders, the simplest way to delay -- or avoid -- paying the dues is by postponing foreclosure until a buyer turns up who's willing to shell out the accrued dues if the property is priced low enough. But in the current market, especially in the worst-hit areas, that can take a very long time.(1)

For more, see The Condo Conundrum (Lenders reluctance to pay overdue condo fees is merely postponing a new wave of U.S. foreclosures). (requires paid subscription; if no subscription, TRY HERE; or TRY HERE, then click link for the story).

(1) A new tactic in dealing with delinquent condo units where mortgage lenders are now being challenging to foreclose or get out of the way (essentially being required to decide to either take title to the financially upside down unit, or release their mortgage) was recently reported in Florida. See:

Blanket Receiverships Come To Daytona Beach In Fight Against Deadbeat, Rent Skimming Condo Owners Stiffing Associations On HOA Fees

In Daytona Beach Shores, Florida, The Daytona Beach News Journal reports:
  • At the peak of the area's housing boom four years ago, Chicago native James Dolan bought a unit at the nine-story Oceanside Inn here when it converted from a hotel to a condo-tel. [...] But, since then, the housing bust has cost him plenty. The owners association recently passed its second special assessment, on top of monthly maintenance fees, to make up for other owners who are in foreclosure or walked away and are not paying their fees.

***

  • The frustration is widespread. So, the owners association, the inn's hired management firm and a local attorney sought and won a rare legal ruling that should help them recover the $154,000 owed by 23 of the building's 123 owners. Circuit Court Judge Richard Graham recently approved the appointment of a "blanket receiver" for the Oceanside Inn. It's the first such ruling in the 7th Judicial Circuit, attorney Jason Harr said.(1)

  • "It's groundbreaking in this district. It's been approved in other districts, but it's never been asked for and the court has never approved it here prior to when we did it," he said. "It's given a life preserver to the association that was in dire straits. There are some owners who owe as much as $16,000."

For the story, see Condo associations gain weapon to collect fees from deadbeats.

Go here for other posts on blanket receiverships.

(1) The story states that the blanket receivership order allows the association to include all delinquent units in one filing, and that similar blanket receivers have been approved in just a few Florida jurisdictions. "It's up to each judge to interpret the statutes in each case," one lawyer said. "But, it's a new strategy, a new argument, novel and it is catching on."

Lenders Refuse To Finance Condo Sale Where 15%+ Of Members Delinquent On HOA Fees, Leaving Unit Owner Unable To Unload Apartment

In Baltimore, Maryland, WBAL-TV Channel 11 reports:
  • The tightening of the mortgage industry is keeping one Glen Burnie man from selling his home. Dave Shaffer said he has a buyer for the home, but that buyer is having trouble getting a home loan because of a lending rule that's just recently been enforced.

  • Shaffer is disabled and unable to work. He said he can't afford to live in his condo community anymore, so he found a buyer to purchase it. Shaffer's home in the Elvation Towne Condominium neighborhood has been on the market for a year and a half. He said he was excited to find a buyer, had packed up his home and was ready to close on the deal last week.

  • "A day and a half before we were to go to closure, I was called and told the banks could not underwrite the loan," he said. Shaffer was told that more than 15 percent of the homeowners in his neighborhood are behind on their homeowners association fees, so his buyer couldn't get a loan. He said they tried many banks and mortgage companies. [...] He said he can't afford to stay in his home, can't refinance because he doesn't have a job and, if he can't sell his home soon, it'll go into foreclosure.

For more, see HOA Fee Law Keeps Man From Selling Home.

Minnesota Woman Faces Charge Of Ripping Off Dementia-Disabled Aunt Of Life Savings, Leaving Her Facing Eviction From Nursing Home & Foreclosure

In Dakota County, Minnesota, the Minneapolis Star Tribune reports:
  • An Eagan woman faces a felony charge of exploiting a vulnerable adult for allegedly stealing more than $35,000 from her disabled aunt. She is accused of gambling away the woman's life savings. Misty M. Williams, 30, was the conservator of the estate of Doris Jean Johnson, 72, who has dementia and lives in an assisted care center in Eagan. [...] Papers filed in probate court show an even higher loss. An examination of Johnson's accounts estimated the losses at more than $50,000 and possibly as high as $125,000, records show.

  • Johnson's bills and rent had gone unpaid, she faced eviction, and her home, which her estate still owned, went into foreclosure because of a mechanic's lien by a homeowner's association, records show.

Source: Eagan woman accused of stealing aunt's life savings, gambling it away.

Thursday, May 06, 2010

The Lawsuits Continue Against Foreclosing Lenders Accused Of Jerking Around Homeowners Seeking Loan Modification Help

In New York City, Crain's New York Business reports:
  • Three Queens homeowners filed a lawsuit against J.P. Morgan Chase Bank N.A. and two of its subsidiaries, Chase Home Finance and Washington Mutual Bank, claiming that the groups illegally delayed and denied their applications for permanent foreclosure relief under the federal Home Affordable Modification Program. The lawsuit is seen as one of the first cases involving the modification program in New York City.(1)

  • The lawsuit, which was filed in the Eastern District Federal Court in Brooklyn, claims that the bank violated the federal program that requires banks to provide permanent modifications to eligible homeowners who complete three months of trial payments and verify their income.

  • Similar lawsuits have been filed against a number of other banks, such as Bank of America and Wells Fargo, in other states over the past year. Last month, a California couple reportedly sued Chase because it told them to stop making mortgage payments so they could qualify for loan modification. Chase then foreclosed on their home. Chase declined to comment.

  • Chase breached their contract,” said Carmela Huang, an attorney at the Urban Justice Center,(2) which is representing the Queens homeowners in the case. “As far as we know, this is the first case in New York.” [...] “Our clients' situation is not unique. We have been inundated by people in foreclosure,” said Ms. Huang, adding that homeowners don't have enough resources to sue banks. In this particular case, Urban Justice is providing its legal service for free. “The law is clearly on our side. We hope Chase will settle quickly.”

For the story, see Chase sued in NYC for denying foreclosure relief (Three Queens homeowners allege the bank illegally delayed and denied their applications under the Home Affordable Modification Program; suit seen as first in NYC).

For the lawsuit, see Begum et al v. JPMorgan Chase Bank, N.A. et al.

See also:

Reportedly, ProPublica is matching local journalists around the country with homeowners having trouble getting loan mods:

(1) For some of the other lawsuits in connection with lenders allegedly jerking around homeowners facing foreclosures with bogus loan modification plans, see:

(2) The Urban Justice Center is a non-profit group that represents an array of New York City's most deprived and abused people in society, including members of the working poor, through the implementation of strategies to provide needed legal services and advocacy to unrepresented and under-represented groups and individuals in New York City, according to its website.

Idaho Couple Say Loan Servicer Approved Loan Modification, Accepted Subsequent Payments, Then Foreclosed On Them Anyway

In Ada County, Idaho, the Idaho Statesman reports:
  • Carey and Tracie Kinghorn were content with their adjustable-rate mortgage, but they were pleased when the Texas-based servicer that had bought their loan offered them a modification to lower their monthly payment by about $500. The change cost them $11,000 in fees and charges, but the Kinghorns signed a contract in April 2009.

  • The company cashed the check but never recorded the modification, the Kinghorns said. In February, they said, they learned that the home would be sold at a foreclosure auction because they hadn't been paying the original full monthly payment. They tried to stop the sale, but it went forward in March.

  • The Kinghorns blame the mortgage servicer for taking their money and selling their home. The company says it handled the Kinghorns' mortgage properly and tried to reach the couple by phone and mail in the past year to no avail. The couple contends they were not contacted.(1)

For more, see Complaints about mortgage relief mount in the Treasure Valley (Some Idaho homeowners say foreclosure threats often follow empty promises of help).

(1) According to the story, an Idaho Statesman story April 7 about a family whose owners said their home was sold after a botched loan modification prompted dozens of responses from Treasure Valley residents complaining about loan servicers, lost paperwork, miscommunication and prolonged modification trial periods. Many reportedly said their loan representatives told them the only way the family could get help was to stop paying their mortgage for several months, and several reportedly said they had lost their homes through foreclosures that shouldn't have happened.

Matchmaker To Link Victims Of Foreclosing Lenders' Loan Modification Jerk-Arounds With Reporters Looking To Cover These Stories

ProPublica reports:
  • Millions of homeowners face losing their homes in the continuing foreclosure crisis, but homeowners often have more than the struggling economy and slumping house prices to worry about: Disorganization within the big banks that service mortgages has made a bad problem worse.

  • Sometimes the communication breakdown within the banks is so complete that it leads to premature or mistaken foreclosures. Some homeowners, with the help of an attorney or housing counselor, have eventually been able to reverse a foreclosure. Others have lost their homes.

***

For more, see Disorganization at Banks Causing Mistaken Foreclosures.

ProPublica reports that it is matching local journalists around the country with homeowners having trouble getting loan mods.

Attorney Cranked Out Paperwork For $2 Per Each Blindly Signed Document Filed In Florida Foreclosure Mill's Home Loan Lawsuits

In Central Florida, a recent story in The Tampa Tribune contained the following execrpt on how notorious assembly line, foreclosure mill law firm Florida Default Law Group, headed by attorney Michael Echevarria, has, in the past, put in requests for attorney fee awards in foreclosure actions:
  • In 2004, The Florida Bar reprimanded Echevarria for violating certain Bar rules, one of which concerned attorney fees. According to Bar documents, Echevarria's law firm asked a Land O' Lakes attorney named Anthony Woodward to certify that Echevarria's legal fees were reasonable, given the amount of time the firm spent on each case.

  • Instead of reviewing each foreclosure case fully, as he was supposed to do, Woodward was simply signing documents attesting to the fairness of Echevarria's fees. Each time Woodward signed his name to a document, he received a $2 fee, the Bar documents show. When reached for comment Friday, Woodward referred a reporter to his own Florida Bar disciplinary case file, which was not available late Friday.

  • Several months ago, Woodward told a Tribune reporter that Echevarria's legal fees - about $1,000 per foreclosure case - were so low he was confident they were reasonable even without reviewing each case.

Source: State AG investigates its own.

Bid-Rigging Attorney Gets 12 Months In 5-Year, $10 Million Conspiracy At Baltimore-Area Real Estate Tax Lien Auctions

In Baltimre, Maryland, The Maryland Daily Record reports:
  • Baltimore County lawyer and real estate investor Harvey M. Nusbaum was sentenced Tuesday to a year and a day in federal prison for his role in a five-year, $10 million bid-rigging conspiracy at tax lien auctions in Maryland. The Justice Department’s Antitrust Division had requested an 18-month sentence, while Nusbaum’s attorney recommended a term of home detention coupled with daily community service, arguing Nusbaum did not know he was committing a crime. U.S. District Judge J. Frederick Motz doubted Nusbaum’s claimed naiveté throughout the day-long hearing, asking about the 72-year-old defendant’s “moral compass.”

***

  • Nusbaum, who was indicted along with longtime friend Jack W. Stollof in June and pleaded guilty in February, must also complete 100 hours of community service and serve two years of probation. In keeping with his plea, he must pay $800,000 in restitution, $250,000 of which he has already paid. He will also lose his law license and not be able to work as an accountant or participate in tax lien auctions, according to his attorney, Paul Mark Sandler.

***

  • The hearing featured a previously undisclosed star witness for the government: John K. Reiff, an attorney, who, along with law partners Anthony J. De Laurentis and Richard Turer, formed an investment fund tax lien that conspired with Nusbaum, Stollof and others to rig bids.

  • Nusbaum’s and Stollof’s names have been in the news for years, thanks to The Baltimore Sun’s 2006 investigation into the problem of ground rents in Maryland. Co-conspirator Steve L. Berman pleaded guilty in June 2008. Reiff and his partners’ involvement had not been made public before Tuesday. (Berman, who did not testify Tuesday, is scheduled to be sentenced later this month.) Thanks to an amnesty agreement reached with federal prosecutors, Reiff will likely have to pay restitution but has not pleaded guilty to any crime, and he, De Laurentis and a third man, John E. Reid, still operate a law office in Highlandtown. Neither De Laurentis nor Turer testified Tuesday.

  • Speaking in a low voice, Reiff detailed how he and his co-conspirators met before or at 10 auctions in Baltimore City and Anne Arundel, Baltimore, Montgomery and Prince George’s counties to make sure they didn’t bid against one another, or “beat each other up,” creating what he called a “sort of round-robin effect.” Reiff said he and his partners bought approximately 5,000 liens from 2003 to 2007, a period in which their firm, then in Columbia, was bidding on behalf of investor clients.

  • Two of those clients have come under legal scrutiny elsewhere for alleged bid-rigging: Bank Atlantic has been sued in federal court in Chicago, and Mooring Tax Asset Group has been subpoenaed in a New Jersey antitrust grand jury investigation.

For more, see Lawyer, 72, sentenced for bid-rigging conspiracy.

Go here for more on bid rigging at real estate-related auctions.

Wednesday, May 05, 2010

Chicago-Area Foreclosure Rescue Operator Peddling Sale Leaseback Programs Targeted In Multiple Lawsuits, Illinois AG Probe

In Chicago, Illinois, the Chicago Tribune reports:
  • The accusations that have piled up against Eliseo Carrillo run counter to the image the Chicago entrepreneur cultivated as a champion of Latino immigrants. As the housing market weakened in recent years, Carrillo's smiling face appeared on billboards throughout the city's Mexican-American neighborhoods. Spanish-language TV commercials featuring Mexican music and Carrillo wearing a stylish cowboy hat promised that his real estate companies — all using the name "Protecta" — were friends and guardians of immigrants in need.

  • But after signing what they believed were loan papers to save their homes from foreclosure, at least four of his struggling clients have filed lawsuits alleging that they were misled into surrendering the deeds to their homes in complex "mortgage rescue" schemes they didn't understand.(1)

***

  • Protecta, which Carrillo has shut down, and two other companies he directs — Loan Negotiator and Cairo Holdings — are being investigated by the Illinois attorney general's consumer fraud division. A spokeswoman for the attorney general confirmed the probe of Carrillo's companies but declined to discuss specifics. Carrillo and his companies also have been targeted by at least a dozen lawsuits since 2006, including the four filed by clients regarding Protecta schemes in which third parties "lent" their credit to distressed homeowners by assuming ownership and taking out a new mortgage in exchange for a profit, with the original homeowner paying rent to cover that second mortgage.

***

  • Lea Weems, an attorney with the Legal Assistance Foundation of Metropolitan Chicago,(2) which represents [one screwed over homeowner], said her nonprofit organization has been looking into nearly 70 cases of alleged mortgage rescue fraud involving a variety of operations. Referring to Protecta, she added: "This one is particularly egregious."(3)

For more, see Mortgage 'rescuer' preyed on immigrants, clients allege (Immigrants sue and say they were misled into surrendering deeds to their homes).

(1) According to the story, the mortgage lawsuits depict Carrillo, 36, as a "scam" operator, savvy in the arcane laws governing real estate transactions, who saw profit in the thousands of troubled home mortgages taken out by immigrants less likely to understand the complicated English-language legal documents and less prone to speak out if something went awry. A few of the clients were in the country illegally, making them even more vulnerable, according to attorneys and community activists, the story states. Two suits are described by the story:

  • In a federal suit, Rafaela Moreno claimed she was steered by Carrillo into signing over the deed to her house in a $10 quit-claim transaction after he allegedly promised to fix her credit. A new loan taken out by an investor on the house paid off her $120,000 mortgage balance. It also earned Carrillo a bank check for $86,320.The next year, Moreno was allowed to repurchase the home, but for $250,000 — more than twice what she owed on the first mortgage, according to court documents. In a 2008 settlement of Moreno's lawsuit, Carrillo agreed to pay Moreno $62,500 in compensation for her losses. He paid nearly half that amount but stopped payments late last year, court documents show.

  • Yet another lawsuit, filed last year by Carmen Macias, tells a similar tale, accusing Protecta and its agents of "stealing" her Southwest Side home after she thought she was refinancing her mortgage in 2006. Instead, the suit claims, the deed was transferred to an investor. Protecta earned $1,800 in fees, while another real estate company with whom Carrillo had had a partnership received $38,000, according to closing documents.

(2) According to its website, the non-profit law firm Legal Assistance Foundation of Metropolitan Chicago has provided free civil legal assistance to tens of thousands of low-income and elderly individuals in Chicago and suburban Cook County for over 40 years.

(3) Innocent straw buyers were reportedly also lured into the scam under the belief that they can participate in helping homeowners facing foreclosure and get paid for it at the same time. Two Protecta investors interviewed by the Tribune described the "sale leaseback" programs Carrillo pitched to help immigrants in financial trouble. From the story:

  • In the arrangement, the investors expected to collect monthly payments from the original homeowners. But in [two] cases, the rent payments went to Protecta, their lawsuits say. Carrillo confirmed that Protecta did handle the rent payments but said it was merely to help document them.

  • One investor, who spoke on the condition of anonymity because he's in the country illegally, was a maintenance man who wound up owning four houses besides his own, according to closing documents naming Protecta as the broker. Though the man said he initially profited about $20,000, all four of the houses now are in foreclosure proceedings. In loan documents recorded by a Protecta agent, the man's monthly income was reported to be $7,200 — more than twice the $3,400 per month his pay stubs at the time say he earned — which made it easier for him to qualify for the loans. "If he would have explained this is how it would happen, we would never have done it," said the investor, who is named as a defendant in one case. "I never wanted to cause pain to those families, nor mine."

  • The second investor, Sergio Villegas, received a profit of $12,438 in one Protecta-arranged transaction, according to court documents. Several properties under his name now are in foreclosure proceedings or were taken over by a bank. "My credit is ruined," Villegas said. "All of this has been very bad."

Cook County Continues Sitting On Million$ In Unclaimed Foreclosure Surplus Funds

In Chicago, Illinois, WFLD-TV reports:
  • If your house has been foreclosed on, believe it or not -- you may have some money coming to that you don't know about. The Cook County Circuit Court Clerk's office has a list of former homeowners who are owed what's called a mortgage surplus. "We have money for you, and we want to give that money to you," Dorothy Brown, Cook County Circuit Court Clerk said. "Our list goes from 13 cents to $461,000 dollars."

  • The mortgage surplus is the amount left over when a foreclosed home is auctioned off and sold for more than you owe. Once the bank is paid off, the rest is yours. Cook County has more than $19 million in unclaimed mortgage surplus funds. The problem is finding foreclosed home owners. Legally, the auction company has to mail out a letter. But the address they have for foreclosed homeowners is usually the house that's just been foreclosed.

***

  • The Cook County Circuit Court clerk's office is also making an extra effort. They recently added a special search engine where you can check on their web site. If you find your name on the clerk's website, you have to file for a court appearance and prove to the judge you are the person on the foreclosed mortgage.

  • Dupage and Will Counties also have mortgage surplus funds. If you live in one of those counties, call the Circuit Court Clerk's office or the Sheriff's Department there to see if you are owed this type of money.

For the story, see Millions In Unclaimed Foreclosure Cash For Cook County Residents.

See also, WLS-TV Channel 7: Clerk: $18M due to foreclosed homeowners:

  • The clerk's database found about 1,900 people are due surplus money. The surpluses mostly involve foreclosures from the 1990s and not the recent subprime mortgage collapse.

Nevada AG's Office: Forensic Loan Auditing Is The Next Evolution In Mortgage Modification Scams

In Las Vegas, Nevada, KTNV-TV Channel 13 reports:
  • Odds are you or someone you know is desperate to save a home from foreclosure. But as you know, many offers for assistance are simply too good to be true. For months, Contact 13 has been digging up dirt on the latest foreclosure rescue scam. It's called forensic loan auditing. Upside down in his mortgage like so many other Southern Nevadans, Al Lopez reached out to a forensic loan audit company called Home Protection Service for help.

***

  • Al says Home Protection Service took his money, but did little to help protect his home. When he received his loan audit, he says they claimed everything passed. Al says the company didn't even do the work they were supposed to.

***

  • The state attorney general's office tells Contact 13 forensic loan auditing is the next evolution in mortgage modification scams. The AG's office is currently investigating 194 companies for similar types of foreclosure rescue fraud. The California Attorney General issued a release warning homeowners to avoid forensic loan audits all together.

***

  • Contact 13 reached out to Home Protection Service, which used to be based in an office complex. Contact 13 started with a phone call, then an email, but never got a response. When we showed up to speak to someone in person, we found the company has closed up shop and basically disappeared, leaving no forwarding address or new phone number. Unlike mortgage modification firms in Nevada, there are no regulations on forensic loan auditing companies.(1)

For more, see Forensic loan auditing is the latest foreclosure rescue scam.

(1) It's difficult to believe that this service, when performed by non-attorneys (or attorneys not licensed in the jurisdiction in which the services are performed) directly for the general consumer public, does not constitute the unlicensed practice of law (which, in most places that I know of, is a felony).

Tuesday, May 04, 2010

The BofA Apologies Continue For Wrongfully Seizing Homes

In Fort Worth, Texas, the Star Telegram reports:
  • Freda Snowden's months-long ordeal to stop a bank from wrongly seizing a house her son owns in far south Fort Worth has ended. Bank of America apologized [] and agreed to pay for damage to the three-bedroom house on Oldham Court caused by agents the bank hired to secure the property for foreclosure. Snowden said bank executives admitted that their records had a coding error and know they have no claim to the property. She said it was frustrating trying to get anyone at the bank to listen to her, let alone return phone calls and e-mails.

***

  • Snowden calls the ordeal, which sent her through several layers of bank bureaucracy to get the problem fixed, a nightmare. "If it's happening to me, how many other families is this happening to?" she said. "These last four months has taken at least 10 years off my life."

  • The bank, she said, was preparing to foreclose on the previous owner. That person bought the house in March 2007 and defaulted on the loan nine months later, deed records show. [...] Snowden said her 29-year-old son bought the 1,460-square-foot house in a September 2008 foreclosure auction and moved in a month later. He put in new appliances, changed light fixtures and was enjoying his house, she said.

  • That changed in November 2009, when he returned home one day to find that the house had been broken into. Nothing was taken, but someone had tried to re-key the home's locks. Not feeling safe, he put the house up for sale in December and moved out, she said.
    In February, the house was broken into again and the locks re-keyed. And again, nothing was taken. Police suggested that squatters might be entering the house, Snowden said.

  • The mystery started to clear a few days later when a real estate agent was showing the house and an uninvited man walked in. When the agent asked why he was there, he said the bank hired his company to re-key the house because of a pending foreclosure. Snowden immediately called her son's lender and the title companies for the sale, she said. All assured her that yes, her son owned the house. "I started calling everyone at Bank of America. No one would talk to me," Snowden said.

For more, see Bank apologizes for error that nearly cost a Fort Worth man his home.

BofA Strikes Again; Hits Central Florida In Its Relentless Seizures Of Wrong Homes Followed By An Apology

In Sarasota, Florida, ABC Action News reports:
  • Neighbor Scott Mondro started asking questions as soon as he spotted the stranger drilling holes in his neighbor's door. Turns out the guy with the hardware was representing Bank of America. Scott Mondro shares the conversation. “He says 'we are foreclosing on this property' and I said 'You have the wrong address. You guys are making a great, big mistake.'”

***

  • The landlord sent Action News an email saying she had previously informed Bank of America about this ongoing mix-up. [..] We asked Bank of America for an explanation, and days later they responded with this statement: "The owners have been contacted to apologize for this inconvenience and to let them know that we are rectifying the process internally. We have also asked the 3rd party contractor to stop all actions."

For more, see Bank attempts foreclosure on wrong home.

Another Lender Wrongfully Seizes Former REO It Recently Sold

In Grand Rapids, Michigan, WZZM-TV Channel 13 reports:
  • It's happened again -- another recently purchased home broken into by a company that was hired to take care of foreclosed homes. WZZM 13 News reported a story Monday about a Newaygo County couple who paid cash for a foreclosed home, only to have their possessions taken six months later.

  • On Tuesday morning, we got another call. This time, workers with a non-profit organization in Grand Rapids said they had a near-identical situation. The organization purchased a foreclosed home a year ago and completely renovated the property. Last month, though, the same company that maintains foreclosed homes, broke-in and winterized the property.

***

  • There were several warning signs posted throughout the house. [Vanessa] Remo called the company listed on the papers, Field Asset Services. "They were very adamant that American Home, a mortgage company, was the person that owned it, so we called and did some research and it was Deutsche Bank that sent them out," says Remo. "I must have sat on hold for two hours, and nobody ever called back."

For more, see Company apologizes for removing property from Newaygo County family's home.

Loan Modification "Jerk-Arounds" Continue For Homeowners Seeking Relief From Foreclosure

Lenders continue in their efforts to sell false hope to financially strapped homeowners seeking to keep their homes out of foreclosure by offering them loan modification deals, then pursuing foreclosure against them anyway, despite the fact that the payments on the loan modification are current and up to date. For two recent stories, see:
  • Puyallup, Washington (Bank of America): Puyallup family fights to keep home (Recession: Owners of Sumner cafe thought they were in federal program, but now foreclosure looms),

Monday, May 03, 2010

Florida AG Directs Attention To One Of Its Own Employees In Ongoing Foreclosure Mill Probe Into Possible Manufacturing, Filing Of Bogus Court Docs

In Tampa, Florida, The Tampa Tribune reports:
  • The Florida Attorney General's Office said Friday that it is investigating the involvement one of its attorneys had with one of the state's largest foreclosure firms. This comes a day after the office said it is investigating the firm, Tampa-based Florida Default Law Group, for what "appears to be fabricating and/or presenting false and misleading documents in foreclosure cases." The investigation is a civil action, rather than a criminal probe.

***

  • Erin Cullaro, a former employee of the foreclosure firm, now works as an assistant attorney general in Tampa for the Economic Crimes Division of the attorney general's office. While working for the attorney general's office, Cullaro was approved to work as a notary for the foreclosure firm, the state law enforcement agency said. Her conduct in that role is now being questioned in connection with an ongoing foreclosure lawsuit that alleges her role was a conflict of interest and that her notarized signatures were inconsistent. Court documents assert that she signed off on documents while out of town on business with the attorney general's office.

  • "Any suggestion that one of our attorneys might have been involved in improper activities while engaged as a notary outside of her scope of employment with this office is troubling," said Ryan Wiggins, a spokeswoman for the attorney general's office. "The attorney general has asked his inspector general to thoroughly investigate this matter."

***

  • Meanwhile, the lawyer who raised the questions about Cullaro said he is pleased the matter is being taken seriously. "This is shocking that one of the attorney general's own attorneys was helping to execute documents on behalf of the very company it is now investigating," said Tom Ice of Ice Legal in West Palm Beach.

  • Ice detailed his questions in court documents filed in the 7th Judicial Circuit in Volusia County.(2) Ice said Cullaro worked as a lawyer with Florida Default Group before she worked for the attorney general's office. When she left the firm, she continued to serve as an expert witness for the firm, signing affidavits to establish that the firm's fees were reasonable. Her sister-in-law, Lisa Cullaro, notarized the affidavits, according to court documents. When Erin started work for the attorney general's office, the Cullaros changed roles: Lisa Cullaro served as the expert witness, and Erin Cullaro notarized the documents.
    Ice said both Lisa and Erin Cullaro's signatures varied in appearance, and he wants to question the two about it. The Cullaros, through lawyers, protested, but a Volusia County judge agreed in early April to allow Ice to ask the two limited questions. This has not yet happened.(3)

For more, see State AG investigates its own.

(1) According to the story, Florida Default Law Group represents lenders and mortgage servicing companies in foreclosure lawsuits and other real estate matters. Such firms, which frequently process hundreds or thousands of foreclosure cases a month, are sometimes referred to as "foreclosure mills" in the legal field.

(2) Go here for Ice's court documents, and here for a transcript of a related court hearing.

(3) Go here for more on the Cullaro women.

Media Coverage On Alleged Fraudulent Court Filings By Florida Foreclosure Mills Continues

In Central Florida, the Bradenton Herald Tribune recently weighed in with their report on the ongoing probe by the Florida Attorney General's office into what it says "appears to be [the] fabricating and/or presenting false and misleading documents in foreclosure cases."
  • Foreclosure defense attorneys who have long complained about false documents in Florida foreclosure cases said judges should pursue claims of possible wrongdoing. "You see all these documents time and time again which on their face are not possible," Tampa attorney Matthew Weidner said. "The judges cannot just ignore this. They cannot ignore blatant fraud in front of their faces." The Attorney General's office opened its investigation into Florida Default in October, but it only became public after the target of the investigation was told about it.

***

  • Twelfth Judicial Circuit Chief Judge Lee Haworth said news of the investigation could prompt judges in Sarasota and Manatee counties to look more closely at filings. But Haworth said the judges do not have the ability to check documents as thoroughly as they would like.(1) "I would be very skeptical they're the only ones," Haworth said of the Florida Default Law Group investigation. "Our anecdotal experience are it's pretty widespread."

For the story, see Paperwork puts foreclosure firm in hot seat (Group suspected of falsifying records to retake homes).

(1) It appears that, at this point, the national and local media coverage on this issue has placed the entire State of Florida on notice of this problem. I wonder how long it will take for Judge Haworth (and other chief judges of the lower courts throughout Florida) to recognize that they really have no choice but to thoroughly scrutinize the court filings by any attorney filing a foreclosure action. Anything less would appear to demonstrate a reckless indifference for the truth on the part of the judiciary, to put it nicely.

"Sovereign Squatter" Movement Running Bogus "Home Adoption" Rackets By Using Phony Deed Filings Spreading Around Country?

In Polson, Montana, the Missoulian reports on the so-called "home adoption" racket being run by self-proclaimed "sovereign squatters" that recently hit locally and is apparently hitting other spots around the country:
  • What’s occurred in Montana is evidently more prevalent elsewhere. In California, according to the Southern Poverty Law Center ["SPLC"], “sovereign squatters” are filing bogus deeds on luxury homes from San Diego to Sacramento. They’ve even got a name for it – “home adoptions.”

***

  • “Sovereign squatters” justify their actions, according to the SPLC’s quarterly Intelligence Report, “with a mix of ‘common law’ theory, so-called sovereign immunity and references to the Old Testament.” The most brazen attempt at a property takeover by the sovereign citizen movement may have occurred last year in a Miami suburb. There, one Angel Cruz showed up with 20 black-clad followers and 10 hired – and armed – security guards, to take over a strip mall branch of the Bank of America.

***

  • Wearing counterfeit U.S. Treasury badges, according to a story by Casey Sanchez in the SPLC’s Intelligence Report, the 30 blocked the bank’s entrance, parking lot and drive-through lanes. Cruz apparently believed what he was doing was legitimate. A week earlier, Sanchez reported, the 49-year-old had stopped by the Palmetto Bay Police Department and asked that officers back him up during his “eviction” of the Bank of America.

  • To an incredulous police officer,” SPLC’s Intelligence Report said, “Cruz handed over a ‘court order’ signed and sealed by a ‘judge’ from ‘The United Cities Private Court’” – United Cities being a company Cruz started.(1)

For more, see 'Home adoptions' in Lolo, Polson: Sovereign squatters a national movement.

(1) For other posts on the "sovereign squatter" / "sovereign king" movement, see:

NJ Woman Indicted In Alleged Theft Of $274K From Her Now-Defunct Law Firm/Employer's Trust Account

From the Office of the Monmouth County, New Jersey Prosecutor:
  • [A] Monmouth County Grand Jury returned an indictment charging Kimberly Dehl, 33, of Toms River, N.J., with one count of second degree Theft and one count of second degree Misapplication of Entrusted Property. The charges relate to Dehl’s former role as the office manager of a Howell Township, N.J., law firm. The indictment follows an investigation which was conducted by the Monmouth County Prosecutor’s Office.

  • Dehl worked for the law firm of Bongiovanni & Pavliv from 1998 until she resigned in November 2007. The investigation revealed that from January 2002 through November 2007, Dehl misappropriated more than $274,000 in funds which were in the law firm’s trust account. Dehl accessed the funds by writing checks from the firm’s trust account which she then issued in order to make her mortgage payments and to pay her personal credit card bills. Dehl also issued checks to herself which she then deposited into her own personal bank accounts. The theft was not discovered until after Dehl’s resignation from the law firm.

  • The law firm of Bongiovanni & Pavliv dissolved in December 2007. The funds which were stolen from the law firm’s trust account were reimbursed by the law firm and the law firm’s insurance carrier.

For the Monmouth County Prosecutor's press release, see Toms River Woman Indicted For Theft From Howell Township Law Firm.

Feds Obtain Judgment Against Southern California Loan Modification Racket For Clipping Homeowners With Upfront Fees & Failing To Deliver On Promises

The Federal Trade Commission recently announced:
  • The Federal Trade Commission has put a permanent stop to another mortgage foreclosure “rescue” operation that allegedly promoted bogus loan modification and foreclosure relief services. The case is one of 17 lawsuits the FTC has brought in the past 11 months in a crackdown on mortgage relief frauds that target financially strapped homeowners, and more cases are being investigated. In February 2009, the FTC charged National Foreclosure Relief, Inc. and three of its principals with falsely claiming they would stop foreclosure or fully refund consumers’ money. [...] Many people paid the company up-front fees as high as $1,000, but still ultimately lost their homes to foreclosure. Others avoided foreclosure only through their own efforts. After paying the fee, consumers who contacted the company were often either ignored or falsely told that negotiations with their lenders were under way.

***

  • The settlements impose a $12 million judgment, approximately $500,000 of which will be paid from company funds frozen by the court. The full judgment against [former director Chele] Stone [also known as Chele Medina] will become due immediately if she is found to have misrepresented her financial condition. Litigation will continue against the remaining two defendants in the case.(1)

For the FTC press release, see FTC Puts Mortgage Foreclosure "Rescue" Company Out of Business.

(1) For the related court documents, see:

  • Stipulated Final Order for Permanent Injunction and Settlement of Claims as to Defendant Chele Stone, a/k/a/ Chele Medina,
  • Stipulated Final Order for Permanent Injunction and Settlement of Claims as to Defendant National Foreclosure Relief, Inc.,
  • Temporary Restraining Order With Asset Freeze, Appointment of Temporary Receiver and Other Equitable Relief, and Order to Show Cause Why a Preliminary Injunction Should Not Issue and a Permanent Receiver Should Not Be Appointed,
  • Complaint for Permanent Injunction and Other Equitable Relief.

Sunday, May 02, 2010

Federal Judge Clobbers Sobbing Sale Leaseback Peddler With 270 Months For Victimizing 17 Minn. Homeowners In Equity Stripping, F'closure Rescue Ripoff

From the Office of the U.S. Attorney (St. Paul, Minnesota):
  • A 41-year-old Prior Lake man was sentenced [] in federal court in St. Paul on charges connected to an equity-skimming scheme that targeted vulnerable homeowners. United States District Court Judge Patrick J. Schiltz sentenced Michael Fiorito to 270 months in prison on one count of conspiracy to commit mail fraud and six counts of mail fraud.(1)

***

  • According to court documents and evidence presented at trial, Fiorito was a mortgage broker at three different Minnesota mortgage companies between 2004 and 2007. During that time, he worked with his assistant, Kristin Louise Jerde, to devise a scheme to defraud homeowners who were in foreclosure or behind on their mortgage payments. Specifically, Fiorito and Jerde caused those homeowners to refinance their home loans or sell their homes outright to Fiorito. Then, he stole their money, either taking the equity checks produced during the refinancing process or the closing checks intended for the sellers of the homes he supposedly purchased.

***

  • Between January 2005 and March 2007, Fiorito fraudulently converted to his own use almost $500,000 in equity as a result of his illegal activity. His victims included 17 people from Janesville, Mound, Duluth, Mankato, Prior Lake, Spring Lake Park, Austin, Golden Valley, Vadnais Heights, and Shoreview, Minnesota.(2)

***

  • In connection to this crime, Fiorito’s assistant, Kristin Louise Jerde, pleaded guilty to one count of conspiracy to commit mail fraud. On September 9, 2009, she was sentenced to serve three years of probation and ordered to pay $364,092.24 in restitution.

For the U.S. Attorney press release, see Former mortgage broker sentenced to nearly 23 years in prison for defrauding vulnerable homeowners.

See also the Minneapolis Star Tribune: Felon sentenced to 23 years for home schemes (Former mortgage broker Michael Fiorito "will victimize" others again, the judge predicted):

  • After much was said and done -- after he spent years blaming victims, filing motions and feigning various ailments -- Michael Fiorito turned to the only tactic he had left Thursday to avoid a long federal prison sentence. He started sobbing. It didn't work.

(1) The press release goes on to say that Fiorito was indicted on June 19, 2007, and was convicted by a federal jury on May 20, 2009, following a three-week trial. At sentencing, Judge Schiltz described Fiorito as a “troubled and dishonest” individual who is “incapable of empathizing” with his victims and who “refuses to accept responsibility” for his actions. Judge Schiltz went on to impose a prison sentence greater than called for under the U.S. Sentencing Guidelines. In doing so, he said, “Never before have I varied an upward sentence, but in this case, I find it justified because of the need to protect the public. I have no doubt that upon his release from prison, Mr. Fiorito will return to victimize others, and the sole way to limit that is to keep him locked up. He’s spent most of his life lying and stealing, and I do not believe it’s possible to deter him.”

(2) According to the press release, witnesses testified at trial that they were unaware they had signed documents granting Fiorito permission to handle their money. In addition, they often times failed to realize they had actually sold their homes to Fiorito. According to them, Fiorito routinely misrepresented the papers he gave them for signature, which led them, unknowingly, to award Fiorito power over their money and title to their property. Court documents also indicate that under certain circumstances, even after Fiorito had fraudulently acquired title to the homes of these unsuspecting people, he sent them monthly “mortgage” bills.

NJ AG Gets $11M+ Judgment Against Foreclosure Rescue Operator Who Screwed Financially Strapped Homeowners With Bogus Loan Modification Services

From the Office of the New Jersey Attorney General:
  • Attorney General Paula T. Dow and Division of Law Director Robert Hanna announced today that a New Jersey loan modification company and its owners have agreed to an $11.45 million judgment to settle civil charges they defrauded homeowners who sought help in staving off mortgage foreclosure.(1)

  • Defendant New Hope Property, LLC, of Bellmawr, Camden County, has agreed to a judgment of $10 million to settle allegations its company, New Hope Modifications, took money up front from customers in return for promised mortgage rescue help – a prohibited business in New Jersey. In addition, New Hope is permanently barred under the settlement from selling debt adjustment, loan modification or foreclosure relief services in New Jersey.(2)

***

  • This is an important outcome, one that should send a clear message to anyone who may be tempted to seek profit in the financial misery of others during these tough times,” said Attorney General Dow. “We are committed to identifying and investigating this type of fraud, and we will take appropriate action where we find it.” “This company, and these individuals, made money by selling false hope to trusting people during their darkest financial hour,” Dow added. “It is appropriate that their professional licenses are revoked, and that they will never again be permitted to operate in our state.”

For the New Jersey AG press release, see Attorney General, DOL Director Announce Settlement in Mortgage Fraud Case; Loan Modification Company, Individuals Agree to $11.4 Million Judgment.

For the consent judgment, see Dow, et al. v. New Hope Property, LLC, et al.

For the original lawsuit, see Milgram v. New Hope Property LLC d/b/a New Hope Modifications.

(1) Filed in March 2009 in New Jersey Superior Court in Camden County, the state’s original four-count lawsuit charged New Hope with violations of the Consumer Fraud Act, state advertising regulations and the Debt Adjustment and Credit Counseling Act. The state’s investigation revealed thousands of victims nationwide.

(2) According to the press release, Brian Mammoccio, identified as a registered agent of New Hope in New Jersey, agreed to a $1.2 million judgment to settle allegations against him. Mammoccio, of Mullica Hill, Gloucester County, has also consented to the revocation of his mortgage solicitor’s registration, and has agreed to never again apply for any license, registration or authority from the state Department of Banking. Donna Fisher, also identified as a registered agent of New Hope, must pay the state $250,000 and has consented to revocation of both her individual lender’s license and her mortgage solicitor’s registration. Fisher, also of Mullica Hill, has agreed to never again apply for any licensure from the Department of Banking.

Colorado AG Targets Foreclosure Rescue Outfit With Lawsuit Alleging Illegal Upfront Fee Loan Modification Racket

From the Office of the Colorado Attorney General:
  • Colorado Attorney General John Suthers announced today that his office has filed a consumer protection lawsuit against American Mortgage Consultants ["AMC"], its owner, Oliver Paul Maldonado, and its principal employee, Santiago Fabian Pineda, on suspicion that they defrauded consumers seeking loan modifications and foreclosure relief.

  • According to the complaint, filed in Denver District Court, American Mortgage Consultants used deceptive advertisements to attract approximately 170 consumers to the loan modification company from January 2009 through March 2010.(1) [...] Maldonado and American Mortgage Consultants are suspected of charging these consumers $2,500 in upfront fees for its services, which is illegal under Colorado law. According to the complaint, American Mortgage Consultants did little if anything to help its customers renegotiate or modify their home loans beyond shipping off their loan modification applications to an Ohio-based company.

For the Colorado AG press release, see Attorney General announces consumer-protection lawsuit against Colorado loan modification company.

For other documents on this case from the Colorado AG:

(1) According to the press release, the company and Maldonado are suspected of using deceptive telephone marketing, direct mail, radio advertisements and Web marketing to attract consumers. According to the complaint, Maldonado also used video of President Barack Obama and materials from the Federal Deposit Insurance Corporation to give consumers the impression that American Mortgage Consultants was affiliated with or partnering with the federal government.

Phoenix Media Outlet Conducts Hidden Camera Probe Into Valley Outfit Offering Allegedly Bogus Assistance For Consumers Seeking Home Loan Help

In Scottsdale, Arizona, KPHO-TV Channel 5 reports:
  • A 5 Investigates hidden camera investigation has been examining a Valley company that promises to devote billions of dollars to reduce mortgage payments for desperate homeowners. It was the combination of a slick website and desperation that Cheryl Van Berkum said led her to a company called the Guardian Group.

***

  • 5 Investigates discovered that the plan was laid out in a power point presentation the company sent to Van Berkum and other desperate homeowners. (Download: Principal Reduction Presentation). The company also e-mailed documents from a recent success story as proof that the program works. [...] However, two months later, Van Berkum said she lost her home to foreclosure, and is out the $1,595 she said she paid Guardian Group.

***

  • 5 Investigates sent one of its producers into the company's Scottsdale office with a hidden camera. [...] When a representative of the company spoke to the producer on the video, it was a familiar story. "We negotiate with the lender," the representative said. "We go and buy, just in simple terms, we go and buy the note -- which is your loan." The Guardian Group representative added, "Actually, they settle for 5-cents on the dollar, 10-cents on the dollar." On the video, the representative said Guardian Group could buy the house and sell it back to the 5 Investigates producer below market value.

***

  • One former Guardian Group employee told 5 Investigates the company signed up more than 2,000 clients at $1,595 each, and that he didn't know of one success story.

For more, see 5 Investigates Mortgage Fraud Claim (Guardian Group Accused Of Swindling Desperate Homeowners).

Philly U.S. Attorney Warns Against Sale Leaseback, Foreclosure Rescue Scams

In Philadelphia, Pennsylvania, Michael L. Levy, U.S. Attorney for the Eastern District of Pennsylvania writes in the Philadelphia Daily News, warning financially strapped homeowners and investors alike against sale leaseback, foreclosure rescue scams:
  • SOMETIMES it begins as a telephone call or mailing that offers help. Even though it may be an obvious solicitation, to the homeowner desperate to avoid foreclosure, it sounds like a hopeful way out. The caller may be offering to have an "investor" buy the home so the current owner can remain and perhaps even buy it back.

***

  • This type of foreclosure rescue scam is perpetrated far too frequently. Our office has prosecuted a wide range of scammers, including lawyers, mortgage brokers and authority figures we normally trust.(1)

Levy gives the following examples of how unwitting individuals get sucked into this type of scam:

  • David is one victim. He lost his job in the economic downturn. When he found work, the pay wasn't enough to afford his $742 monthly mortgage. He fell behind. Foreclosure notices soon followed, as did fliers offering to help distressed homeowners. He called. The mortgage "rescue" company told him the only way out was to sell his house and rent it back. David's rental payments started at $1,000, but kept increasing with no explanation. He was soon evicted and now lives in a motel.

***

  • Sally's troubles began with her divorce. She had to take a second mortgage and it wasn't long before the foreclosure notice came. Because she fell behind on her payments, her credit suffered and no bank would help her refinance. She sought help from a "foreclosure relief specialist" who told her that investors would buy her house for half the equity and use the other half for her down payment to help her eventually buy back the house. But at settlement, Sally received nothing despite having $150,000 in equity in the home, and her monthly payments went from $1,800 a month to $2,800.

  • Investors also fall victim to these scams. The victims are led to believe they're making an investment in real estate and that they're helping to save someone's home.
    They are recruited as worthy investors because of their good credit and steady income. Tom and his wife are just one example. They purchased three homes believing they would help the former homeowner remain while making a small profit. The mortgage broker told them that some of the equity in the house would be put aside as a cushion in the event that the tenant couldn't make a payment. But the broker lied, the money wasn't put aside, the adjustable-rate mortgages kept adjusting upward, and the original owner couldn't afford to buy back the house. Tom and his wife are now in bankruptcy and are likely to lose their own home as a result of trying to help someone in need through a crooked broker.

For the column, see Warning: Mortgage Fraud Ahead.

(1) For an example, see: