Sacramento Feds Score 3 Convictions Centering On Equity Stripping Racket That Peddled Sale Leaseback Ripoffs To High-Equity Homeowners In Foreclosure

In Sacramento, California, The Record Searchlight reports:

• Two Redding residents indicted by a federal grand jury in 2010 for their roles in what prosecutors have described as a fraudulent foreclosure recovery scheme pleaded guilty [] in U.S. District Court, a spokeswoman with the U.S. attorney's office said. A Redding woman also indicted in the same case has rejected a plea bargain offer and is scheduled to stand trial next month.
  
  
• Lauren Horwood, a spokeswoman for the U.S. attorney's office, said Darrin Arthur Johnston, 47, and Todd Allen Smith, 49, both of Redding, as well as Jeremiah Allen Martin, 34, of San Antonio, pleaded guilty Tuesday and are scheduled to be sentenced on Sept. 25. But she said the terms of the plea bargains, as well as the specific counts to which the trio admitted guilt, won't be released until then.

***

• Prosecutors have said the alleged fraud scheme resulted in financially distressed homeowners signing over the deeds to their homes with the understanding that they could lease them and buy them back in two years. But, prosecutors have said, Johnston, Smith and Martin allegedly pocketed the lease-rental payments instead of paying off the loans.
  
  
• Peterson, who was an escrow officer, used her notary status to give the appearance of legitimacy to the scheme, the federal indictment claims. Many homeowners lost their homes in the course of the alleged fraud, and lenders suffered losses in excess of $1 million, prosecutors have said.

***

• According to the federal jury's indictment, the so-called foreclosure recovery program was based on their false representations that the homeowners could lease back their homes for a low rent and that they would help them repair their credit.
  
  
• After obtaining titles to the homes, however, prosecutors said, Martin, Johnston and Smith allegedly extracted equity from them by inflating their values and obtaining additional loans, keeping the rent payments rather than making payments to lenders, and then allowed the homes to be lost in foreclosure.(1)

For the story, see Three plead guilty to federal charges in Redding foreclosure recovery scheme (Fourth person will stand trial next month).

(1) For more on this type of foreclosure rescue ripoff, see:

• Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals;
• Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005).

Nevada Foreclosure Investors File Massive Federal False Claims Act Suit Targeting HOAs That Allegedly Squeezed Them For Improper Charges

In Las Vegas, Nevada, Vegas, Inc. reports:

• Attorneys for investors in Nevada foreclosed homes have filed yet another massive lawsuit challenging homeowner association assessments and collection costs. The latest suit was filed secretly in April 2011 in federal court in Las Vegas and it was unsealed on Wednesday.
  
  
• In the suit, investors’ attorneys Puoy Premsrirut and James Adams represent the United States government with their suit filed under the False Claims Act. It was initially filed secretly so the government could review it to see if it wanted to participate in the action.
  
  
• Under the False Claims Act, citizens can sue on behalf of the government when they become aware of alleged wrongdoing causing harm to the government. They can then share any damages collected with the government.In this case, the U.S. Justice Department specifically chose not to intervene in the suit and it chose not to seek dismissal of the suit.

For more, see Nevada HOA foreclosure assessments challenged in False Claims lawsuit.

Closing Agent Cops Guilty Plea For Illegally Diverting Escrow Funds From Real Estate Closings

From the Office of the U.S. Attorney (Miami, Florida):

• [D]efendant Linda Irene Rovetto, 69, of Lake County, pled guilty [] in connection with her participation in a bank fraud conspiracy scheme. More specifically, Rovetto pled guilty to converting and misdirecting more than $3.5 million of real estate escrow funds, in violation of Title 18, United States Code, Sections 1344 and 1349.

***

• On December 9, 2010, defendant Rovetto and three others were indicted on bank fraud, conspiracy, and related mortgage fraud charges. According to the charges, Rovetto, through her company Florida Lakes Title & Closing, LLC, along with various co-defendants, were diverting escrowed mortgaged funds from real estate closings.
  
  
• In this way, the defendants diverted more than $3.5 million in mortgage loans to Raviworld New Homes, Inc., a company managed by codefendant Bhaardwaj Seecharan. Bhaardwaj Seecharan pled guilty on April 2, 2012 to the same charges as Rovetto.

For the U.S. Attorney press release, see Lake County Woman Pleads Guilty to Bank Fraud Conspiracy Charges.

Real Estate Agent Pinched For Allegedly Using Client's Personal Information To Score $412K Mortgage

In East Orange, New Jersey, The Star Ledger reports:

• Authorities have charged a real estate agent with fraud for illegally using a client’s personal information to secure a mortgage on a property, then operate her business and collect rent from the same location.
  
  
• Sylvia Sexius, 46, was arrested [], charged with theft by deception, forgery and theft by unlawful taking, the Essex County Prosecutor’s Office announced. Authorities were alerted to the alleged crime in October, when a Newark woman reported she had been receiving foreclosure notices for an East Orange property she did not own.
  
  
• The prosecutor’s office financial crimes unit investigated and discovered that Sexius, an East Orange-based real estate agent, had completed a fraudulent mortgage on the property for $412,000 using the Newark woman’s personal information, authorities said. Sexius, of Orange, had allegedly obtained the information after having earlier refinanced the woman’s home.
  
  
• Sexius took possession of the property at 520-524 Prospect St., then began operating her real estate business there while also collecting rental income from commercial and residential units in the same building, the prosecutor’s office said.

Source: Real estate agent charged with fraud, allegedly used a client's information to get a mortgage.

MERS, Others File Responses To NY AG Charges Relating To Banksters' Dubious Foreclosure Filings

In Brooklyn, New York, the New York Law Journal reports:

• MERS and several banks who were sued by New York's attorney general for allegedly initiating faulty foreclosure actions have struck back in the high-profile litigation by strongly defending their practices and discounting the office's assertions as factually and legally deficient.
  
  
• In February, Attorney General Eric Schneiderman sued MERS—Mortgage Electronic Registration Systems—and several major banks and mortgage servicers, including JPMorgan Chase, Bank of America and Wells Fargo.
  
  
• The action contended the defendants' use of the MERS system resulted "in the filing of improper New York foreclosure proceedings, undermined the integrity of the judicial process, created confusion and uncertainty concerning property ownership interests, and potentially created clouds of title on properties" across the state (NYLJ, Feb. 6).
  
  
• Defendants fired back on April 20, seeking dismissal of the suit and claiming that their practices—such as having MERS commence a foreclosure or using a private registry to track loan ownership rights—were not deceptive and stressed that the attorney general never pointed to a single case where an action was initiated against a homeowner who was not in default.
  

***

• The case has been assigned to Brooklyn Supreme Court Justice David Schmidt and the attorney general's response is due June 22.

For more, see MERS, Banks Call A.G.'s Suit Factually, Legally Deficient.

Go here for the New York Attorney General lawsuit filed Feb. 3 describing MERS Inc. of Virginia, a digital mortgage tracking service, as "a shell company" established as a stealth mortgagee for banks, particularly JPMorgan Chase, the Bank of America and Wells Fargo Bank.

Go here for MERS' Motion to Dismiss.

Go here for the Banksters' Motion to Dismiss.

Criminal Prosecutions Related To New Jersey Municipal Tax Lien Bid Rigging Probe Lead To Property Owner's Civil Suit Making Similar Charges

In Trenton, New Jersey, Courthouse News Service reports:

• A federal class action claims that 26 people, banks and corporations, "who are among the largest purchasers of tax sale certificates in the State of New Jersey," rigged bids at municipal tax lien auctions to assure that interest rates on property tax obligations would stay at the maximum 18 percent. The named plaintiff is MSC, LLC, of Cherry Hill.



• "A Tax Sale Certificate was issued with respect to plaintiff's property, and such Tax Sale Certificate was purchased by one of the defendants pursuant to the conspiracy alleged herein," the complaint states.



• "As a result of the defendants' conduct alleged herein, the interest rate associated with plaintiff's delinquent tax obligation was artificially inflated and plaintiff was damaged thereby. Plaintiff is currently facing the prospect of foreclosure on its property by one of the defendants due to the TSC associated with its property."

For more, see Class Alleges Conspiracy in Tax Lien Auctions.

For the lawsuit, see MSC LLC v. Collins et al.

Michigan Appeals Court To Stiffed Lenders: 'One Action' Rule Means What It Says - Only One Action At A Time In Cases Involving Foreclosure

Lexology reports:

• [T]he Michigan Court of Appeals, Michigan’s intermediate appellate court, issued its opinion in Greenville Lafayette, LLC v. Elgin State Bank (Case No. 308450), which reversed a decision of the Montcalm County Circuit Court on the scope of Michigan’s “one action” rule applicable to mortgage foreclosure by advertisement proceedings, MCL 600.3204(1)(b).



• This statutory provision prohibits the commencement and continuation of foreclosure by advertisement proceedings when “an action or proceedings, at law” have been instituted “to recover the debt secured by the mortgage or any part of the mortgage.”



• If such an action or proceeding has been commenced and is pending, it must be discontinued before the foreclosure proceeding can be begun. Alternatively, if such an action has resulted in the entry of a money judgment on the mortgage debt, then the foreclosure proceeding may only be commenced if an execution on that judgment “has been returned unsatisfied, in whole or in part.” Id.



• The rationale for this rule is to prohibit harassment of the mortgagor by requiring it to defend two proceedings at once and to forbid a double recovery on the debt. See, e.g., Lee v. Clary, 38 Mich. 223, 227 (1878); Larzelere v. Starkweather, 38 Mich. 96 (1878).

For more, see “What do you mean that I can’t foreclose my mortgage and sue the guarantor at the same time? Since when?” (may require subscription; if no subscription, GO HERE.

Antitrust Feds Pinch Another In Ongoing Probe Into Bid Rigging At New Jersey Tax Lien Auctions

From the U.S. Department of Justice::::;:;

• A financial investor who purchased municipal tax liens at auctions in New Jersey, as well as a company in which he was a partner, pleaded guilty [] for their roles in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities throughout the state, the Department of Justice announced.

• A felony charge was filed [] in the U.S. District Court for the District of New Jersey in Newark, N.J., against David Butler of Cherry Hill, N.J. A charge was also filed against DSBD LLC, a New Jersey company responsible for managing tax lien investments in which Butler had a partnership interest. Under the plea agreements, which are subject to court approval, Butler and DSBD have each agreed to cooperate with the department’s ongoing investigation.



• According to the felony charges, from at least as early as the beginning of 2005 until approximately February 2009, Butler and his company participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders on which liens to bid.

• The department said that both Butler and DSBD proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.

For the Justice Department press release, see New Jersey Financial Investor and His Company Plead Guilty to Bid Rigging at Municipal Tax Lien Auctions.

Title Underwriter: Property Acquired Through 'Mortgage Terminator' Lawsuits Are Uninsurable

From the Florida Condo & HOA Blog:

• The largest title insurance company in Florida (Attorneys’ Title Fund Services, LLC, also known as “The Fund”) recently published an opinion by its underwriting counsel cautioning attorneys and title insurance companies against closing and insuring any transaction where the association’s title was obtained through a “mortgage terminator” lawsuit.



• What is a “mortgage terminator” lawsuit? It is a marketing term used to describe a lawsuit filed by a condominium or homeowners’ association, after the association has taken title to a unit (typically through foreclosure of the association’s lien). After acquiring title to the property, the association files suit against the lender (the owner of the mortgage) to “terminate” the mortgage. When the lender fails to appear, a default judgment is entered granting the relief sought which includes cancellation of the mortgage of record.



• Proponents of the “mortgage terminator” lawsuit have tried to convince associations that these lawsuits are a good idea. Some are actively encouraging associations to move forward with this type of action. We are seeing more and more evidence that these tactics ultimately put associations at risk. Associations may have sold such units to third-parties, claiming that the mortgage on the unit has been “wiped-out” by the mortgage terminator lawsuit.



• In reality, the lender may still have the right to enforce the mortgage. Therefore, an association could be sued by the person who bought the unit from the association and who thought that he or she had clear title to the unit. And instead of clear title to the unit, the new owners could be forced to move out of the unit when the bank took title or would have to pay rent to the bank on a unit that they thought they owned.



• So associations should proceed with caution and understand that any potential benefit from these types of lawsuits are outweighed by the risks to the association and the innocent third party that buys such a unit from the association.

Source: Mortgage Termination Lawsuits Do Not Give Associations Clear Title.

Homeowner Gets Temporary Stall From Foreclosure Eviction; Judge Orders Discovery To Establish Legitimacy Of Dubious 'Linda Green' Mortgage Assignment

In Detroit, Michigan, The Michigan Citizen reports:

• A metro Detroit homeowner received a temporary victory in court April 16 against a possible illegal eviction. Attorney Vanessa Fluker argued in Wayne County Circuit Court that Deutsche Bank is using forged documents to claim ownership of her client’s home. Fluker’s client, who asked that her name not be released to the press, is facing eviction despite seeking loan modifications and attempting to buy her home after a sheriff’s sale.



• Deutshe Bank is one of several large financial institutions foreclosing on homeowners without knowing who legally possesses the title, Fluker argued before Judge John MacDonald. Fluker was in court to defend her client from Deutsche Bank.



• Fluker says her client is a victim of an epidemic of robo-signings — the practice of banks signing thousands of documents and affidavits without verifying the information. “The whole issue is that the homeowner was at the eviction stage and they actually challenged the legitimacy of the ownership/interest of the plaintiff, which is Deutsche Bank,” Fluker told the Michigan Citizen. “One of the reasons and rationale for this is that there were numerous assignments, one of which was done by a ‘Linda Green,’ a nationally known robo-signer.”



• Fluker argued the assignments were improper and therefore would affect the bank’s standing to initiate a legitimate foreclosure and subsequent eviction.



• Judge MacDonald ruled in favor of Fluker’s client, saying a period of discovery was required before he could establish the “assignment of mortgage” and the case could move forward.

For more, see Bank forges signature, homeowner gets temporary victory.

Minnesota Suit Alleges Servicemember Lost Home To Foreclosure While Away On Active Duty; Class Action Status Sought

In St. Paul, Minnesota, the Star Tribune reports:

• Army Staff Sgt. Phillip Harry learned his house had been foreclosed upon and sold in a letter forwarded to him while he was serving in Iraq. Harry, a member of the Minnesota National Guard, filed suit on Friday against his mortgage company, alleging the company violated a federal law protecting service members from losing their homes while they are deployed.




• Reflecting a convergence of two major social issues: the home foreclosure crisis and the return of thousands of members of the military from Iraq and Afghanistan, attorneys for Harry are seeking to have the suit certified as a class action, saying hundreds of service members are likely to have faced the same situation.

***

• The suit filed in U.S. District Court in Minnesota accuses Illinois-based HSBC Mortgage Services of violations of the Servicemembers Civil Relief Act, signed into law in 2003 as a way of easing the economic and legal burdens on military personnel called to service.



• The suit alleges that the company has foreclosed on service members' mortgages while they were on active duty and evicted them and their families without giving them a chance to challenge the foreclosures in court. It also alleges that HSBC recklessly filed papers that said Harry was not a member of the military at the time of the sale, when a simple check of public records would have shown he was serving overseas.

For more, see Soldier's foreclosure was illegal, federal lawsuit alleges.

See also, Minnesota Public Radio: Lawsuit accuses bank of foreclosing on active-duty service members.

Lawsuit: Property Seller Under Contract For Deed Pocketed $51K In Payments, Then Stiffed Buyer On Title Transfer

In Jefferson County, Texas, The Southeast Texas Record reports:

• A Jefferson County woman claims the seller of property she purchased refuses to convey the property's deed to her. Doris Marie Living filed a lawsuit April 5 in Jefferson County District Court against Calvin Spikes.



• In her complaint, Living claims she entered into a contract for deed and made $51,000 in payments. Despite Living's payments, however, Spikes refuses to transfer the deed to her, breaching his contract with her, according to the complaint.



• Spikes also violated the Texas Property Code by refusing to transfer the property title to Living, the suit states. Not only did Spikes refuse to give Living the deed to the property she purchased, but he also overcharged her by $4,000, the complaint says.



• In her complaint, Living seeks a declaratory judgment that she legally owns the title to the property.



• She also seeks actual damages, a refund of overpayments, liquidated damages in the maximum amount allowed by law, attorneys' fees, costs, pre- and post-judgment interest and other relief the court deems just.

Source: Woman in legal dispute over property deed.

Missouri High Court: F'closure Deficiency Damages Calculation To Be Based On Deflated Auction Sale Price, Despite Property's Higher Fair Market Value

Lexology reports:

• On Tuesday, April 17, 2012, the Missouri Supreme Court handed down its decision in First Bank v. Fischer & Frichtel, Inc. (Case No. SC91951), a case which we originally discussed in early-October.  The Court’s 6-1 decision (with Justice Draper and Justice Price not participating and Justice Teitelman dissenting in a separate opinion) upheld Missouri’s common law approach to calculating the amount of a deficiency judgment resulting from a foreclosure.



• Missouri courts have long held that the measure of a deficiency is the difference between the debt owed and the price paid at a foreclosure sale. The Court stated that any change to that law should be made by statute.

***

• The Borrower asked the Missouri Supreme Court to overrule Missouri’s common law approach to measuring deficiency judgments by adopting the Restatement (Third) of Property fair value approach.  This approach limits a lender’s deficiency damages to the difference between the fair market value of the property on the date of the sale and the amount due on the note.



• During oral argument, counsel for the Borrower stated that 35 states have incorporated a fair market value approach. However, the Court’s opinion notes that all of the states that follow the fair market value approach have either always done so or have done so in accordance with state statute.

For more, see Missouri Supreme Court reaffirms deficiency judgment measure in First Bank v. Fischer & Frichtel, Inc. (may require subscription; if no subscription, GO HERE; or TRY HERE - then click the appropriate link).

In a related story, see St. Louis Post Dispatch: Missouri Supreme Court decision could hit Matheny in the wallet (New Cardinals manager Mike Matheny is off to a sizzling start in the dugout, but a ruling by the state's highest court could deal a blow to his finances).

Atlanta Cops Pinch 'Sovereign' Pair On Theft By Deception, Racketeering Charges; Duo Accused Of Hijacking Vacant Foreclosed Homes Using Adverse Possession Claims

In Atlanta, Georgia, the Atlanta Journal Constitution reports:

• A husband and wife associated with the so-called sovereign citizens movement were arrested Thursday for allegedly trying to sell stolen vacant Atlanta homes. Edgar Lee Rodgers and Diane Rowe are accused of filing false adverse possession documents – essentially claiming squatters’ rights – to homes that were vacant, likely due to foreclosure. Rodgers and Rowe are being held in the Fulton County jail awaiting bond hearings on racketeering and multiple theft-by-deception charges.
• Police say the couple ascribe to the sovereign citizen philosophy that they are subject to the rule of common law – that is, legal precedent established by judges – and are immune to federal, state and local laws.
• "The irony of it is that while they were out convincing people to buy homes using adverse possession, they both paid a regular mortgage," said Sgt. Paul Cooper, head of the Atlanta Police Department fraud unit.
• Rodgers called himself Immanuel Hood and went around recruiting people to take over homes using adverse possession, police said. He was charging upwards of nearly $9,000 to walk people through his process for adverse possession, promising them they could own homes in as little as two weeks for sums as low as $2,000. "He was literally hosting tours of homes," Cooper said. At least 19 homes across Atlanta were targeted.
• Georgia's adverse possession laws allow for a person living in a home for 20 years or more -- with the owner's knowledge and express permission -- to take possession of the home. Rodgers' method fell far short of the state's requirements, authorities said.

For more, see Police: Man gave tours of stolen homes.

Minnesota Lawmakers Make Move To Close Loophole Allowing Loan Modification Rackets To Flourish

In Minneapolis, Minnesota, the Star Tribune reports:

• The homeowners met at such places as Perkins or McDonald's, desperately handing over hundreds of dollars to Kevin Sistrunk in hopes he could help save their home from foreclosure. He never did. Instead, the more than $6,000 they gave him was deposited into his personal bank account.
• The 2011 case that resulted in felony convictions against Sistrunk of North Branch for check forgery and theft is part of a growing number of loan modification scams targeted at homeowners looking to refinance their homes or save them from foreclosure.
• In response, Minnesota legislators are moving to ramp up regulations for loan originators like Sistrunk, who have been exempt from nearly all state regulations for the loan modification industry. Legislation that unanimously passed in the Senate and is now awaiting a vote in the House would close that loophole.
• Advocates and lawmakers say tightening state law will better protect homeowners by requiring loan originators to give specific warnings or provide copies of paperwork, among other provisions. It also will make it easier for lawyers to pursue charges when fraud occurs.
• "What has arisen here is people getting these licenses as a way to avoid complying with the law," said Ron Elwood, supervising attorney for Legal Services Advocacy Project who lobbied for the change. "It's a growing problem and the potential [for damage] is tremendous as soon as folks figure out that, to get a mortgage broker license, they get a 'get out of jail' free card ... It has become an epidemic."
• Current state law says financial consultants licensed as loan originators only have to abide by one state rule: Don't charge compensation until after completing what they tell a consumer they'll do. But even that, Elwood says, is loosely defined, giving them ways around it to charge upfront fees. Other provisions such as providing paperwork copies or allowing a homeowner to sue for damages are exempt for loan originators.
• "Nobody contemplated that loan modifiers ... would actually use the license as a shield to get away with it," Elwood said.
• In cases that aren't as well-documented as that against Sistrunk, the added provisions would make it easier to build a case in civil court and would put more liability on the company that employs the loan originator. In the case of Sistrunk, prosecutors in Washington County had a clear paper trail.
• Sistrunk, who worked for Trinity Mortgage, promised to help seven families refinance or modify home loans in 2008 and 2009. They met him at their homes or at fast-food restaurants to drop off checks of about $750 each, according to court documents. In all, they gave Sistrunk $6,375.
• No copies of the paperwork they signed were given to them. No homes were refinanced and no loans were modified, causing some of the homes to end up in foreclosure. And every check they wrote was deposited in Sistrunk's personal account even though they were written to Trinity Mortgage. After an investigation by the state Department of Commerce, Sistrunk pleaded guilty and was convicted of check forgery and theft, both felonies. Not all of the restitution has been paid yet, County Attorney Pete Orput said, which "just compounds the pain for these victims."
• In recent years, he said his office have seen more mortgage fraud cases like Sistrunk's, and often "they can hide behind a good faith effort ... a lot of finger-pointing," he said.

For more, see Whistleblower: Loan modification scams 'a growing problem' (A bill moving through the Legislature aims to better protect homeowners from unscrupulous originators).

Ohio AG Files Civil Suit Charging Alleged Loan Modification Racket Of Pocketing Upfront Cash, Then Failing To Deliver Promised Services

From the Office of the Ohio Attorney General:

• Ohio Attorney General Mike DeWine [] announced a lawsuit against Christopher Rojas of Irvine, Calif., for running a foreclosure rescue operation that used multiple business names and failed to deliver on its promises to lower consumers' mortgage payments. The lawsuit charges Rojas with multiple violations of Ohio's consumer laws.

***

•  Christopher Rojas, working out of California, promises consumers that he will reduce their mortgage payments in exchange for fees of approximately $3,000 per consumer. Despite accepting substantial down payments, Rojas fails to provide beneficial services to consumers and fails to refund their money.
• According to the Attorney General, Rojas also routinely changes his business names when consumer complaints begin to surface. Rojas has done business as National Juris Solutions, US National Legal Solutions, Weston & Wyatt, Merrill & Warren, and Legacy Holdings Group.

For the Ohio AG lawsuit, see State of Ohio v. Rojas.

Homeowner Victimized By Loan Mod Runaround Scores Foreclosure Dismissal; Judge: Failure To Date Loan Mod Agreement Not Fatal To Valid Contract

In Prescott, Wisconsin, the Pierce County Herald reports:

• Judge Joseph Boles dismissed a foreclosure action brought by JP Morgan Chase Bank against Steven J. and Sharolynne Atkins, N4893 1100th St., Prescott.
• According to background in the decision, the Atkinses fell behind on their mortgage in 2009. They negotiated with the finance company to modify the terms of the mortgage and were approved for modification in December 2009. They signed the agreement in January 2010.
• According to the judge’s decision, the couple made all the payments required by the modification agreement since June 2009. But in August 2010, the bank began rejecting the $719 monthly payments, returned the check and began foreclosure proceedings. JP Morgan claimed the modification agreement was not valid because Sharolynne Atkins’ signature was not dated.
• Boles found the loan modification agreement was a valid contract, the signatures had been notarized and Atkins’s failure to print a date by her signature did not invalidate the agreement.

Source: Judge dismisses foreclosure action against Prescott couple.

Accusations Continue That BofA Gives Homeowners Loan Mod Runaround, Pocketing Reduced Workout Payments, Then Threatening Foreclosure Anyway

In Port St. John, Florida, WFTV-TV Channel 9 reports:

• A Port Saint John family thought they had avoided disaster after a loan modification was approved. But  a year later, they claim, Bank of America is foreclosing on their home even though they haven't missed a mortgage payment since the modification.

***

• Billie Whaley posted three signs  at her  home, all attacking Bank of America. One reads: "Please help us. Bank of America is trying to steal our home." Whaley claims the lender double-crossed her family by approving  a loan modification, taking payments for nearly a year, and now threatening foreclosure. "I can't think about it and not cry. We put everything into this home," Whaley said.
• According to Waley, the bank approved a modified loan with a congratulations letter last March and dropped their payment by $200 a month. Months later, the bank said it had not signed the final papers, but Waley claims she was told to keep paying and the bank told her, "We apologize, it's on our end, it's our problem, everything's going to be fixed."
• But now, Bank of America told the Whaleys they are $14,000 behind, and it has start the foreclosure process. They're not alone. WFTV has received a dozen complaints from Bank of America customers just this year. Many claim they can't get a straight answer about their loan modification.
• What angered the Whaleys was that the bank kept cashing their mortgage checks, but did not apply anything toward their loan. [...] Bank of America told WFTV, the couple's case is now under review and they have contacted them. But the Whaleys are considering legal action against the bank to enforce what they consider a final modification.

For the story, see Foreclosure Threats Even After Loan Modifications.

N. New Jersey Man Pinched For Peddling Sale Leaseback Ripoffs Targeting High Equity Homeowners Facing Foreclosure Gets 21 Months

From the Office of the U.S. Attorney (Newark, New Jersey):

• A former employee of a Parsippany, N.J., mortgage lender who admitted taking $138,402 in illegitimate proceeds of multiple home sales as a result of a mortgage fraud scheme was sentenced [] to 21 months in prison, U.S. Attorney Paul J. Fishman announced.
• Jorge Abbud, 33, of Dover, N.J., previously pleaded guilty before U.S. District Judge William H. Walls to an Information charging him with wire fraud. Judge Walls imposed the sentence today in Newark federal court.
• According to documents filed in this case and statements made in court: In 2008, Abbud was an employee of a Parsippany mortgage lender. He admitted that he targeted homeowners in New Jersey who had equity in their homes, but were facing foreclosure because of their inability to pay their monthly mortgage payments.
• Abbud falsely promised to help these homeowners avoid foreclosure, keep their homes, and repair their damaged credit. He instructed the homeowners to permit the titles of their homes to be recorded in the names of third-party purchasers (“straw buyers”) for approximately one to three years, promising the homeowners that he would improve their credit scores during that time, obtain mortgages with more favorable interest rates for them and return the titles of the homes to the homeowners.(1)

For the U.S. Attorney press release, see Former Employee of Parsippany, N.J., Mortgage Lender Sentenced To 21 months In Prison For Fraud.

(1) For more on this type of foreclosure rescue ripoff, see:

• Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals;
• Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005).

Feds Take Down Another Investor In Mobile Foreclosure Sale Bid Rigging Probe; Suspect Agrees To Plea Guilty, Serve 6 Months, 'Sing' Against Others

From the U.S. Department of Justice:

• An Alabama real estate investor has agreed to plead guilty and to serve prison time for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama, the Department of Justice announced today.  To date, as a result of the ongoing investigation, three individuals and one company have pleaded guilty.
• Charges were filed [] in the U.S. District Court for the Southern District of Alabama in Mobile, Ala., against Lawrence B. Stacy of Mobile.  Stacy was charged with one count of bid rigging and one count of conspiracy to commit mail fraud.
• According to the plea agreement, which is subject to court approval, Stacy has agreed to serve six months in prison.  Additionally, Stacy has agreed to pay a $10,000 criminal fine and to cooperate with the department’s ongoing investigation.
• According to court documents, Stacy conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama.  After a designated bidder bought a property at the public auctions, which typically take place at the county courthouse, the conspirators would generally hold a secret, second auction, at which each participant would bid the amount above the public auction price he or she was willing to pay.  The highest bidder at the secret, second auction won the property.

For the Justice Department press release, see Alabama Real Estate Investor Agrees to Plead Guilty to Conspiracies to Rig Bids and Commit Mail Fraud for the Purchase of Real Estate at Public Foreclosure Auctions.

Vegas Loan Mod Suspect Faces Theft Charges After Allegedly Pocketing Upfront Fees, Failing To Provide Substantive Services

From the Office of the Nevada Attorney General:

• Nevada Attorney General Catherine Cortez Masto announced [] the arrest of Stephen Vitalich, 46, on charges of theft. The criminal complaint filed by the Attorney General alleges Vitalich, doing business as Consumer Loan Excellence of America, LLC or NBMS of America, LLC, promised clients he would obtain mortgage loan modifications that would substantially reduce clients’ monthly mortgage payments. The complaint further alleges that after collecting large advance fees, Vitalich performed no substantive work on his clients’ behalf and eventually disappeared with their money.
• Vitalich, who was arrested Thursday, is charged with one count of theft of obtaining money in the amount of $2,500 or more from a person 60 years of age or older, two counts of theft of obtaining money in the amount of $2,500 or more, and one count of theft of obtaining money in the amount of $250 or more.

For the Nevada AG press release, see Nevada Attorney General Announces Arrest In Mortgage Loan Modification Scam.

For the criminal complaint, see State of Nevada v. Vitalich.

Cops Pinch Suspect In Loan Mod Ripoff Who Rejected Opportunity To Give Full Refund To Disgruntled Customer

In Miramar, Florida, the South Florida Sun Sentinel reports:

• A homeowner who wanted to lower his mortgage payments says he grew skeptical of the woman he hired to perform a loan modification on his home. Hernando Chica, 67, of Miramar, said he contacted police after all he got were promises and excuses from her.
• During an investigation, Miramar officers learned that the woman he hired, Cindy Clara Bouza, 38, of Miami-Dade, wasn't licensed to conduct loan modifications, according to a police report. 
• The state Office of Financial Regulation further told police that a person conducting a loan modification isn't allowed to collect "any fees up front, and that a credit check, appraisal and inspection does not have to be completed for a loan modification."
• On Tuesday, Bouza was arrested on one count of operating as a loan originator without a license and one count of assessing or collecting an advance fee, police said.

***

• According to a Miramar police complaint affidavit: Chica hired Bouza in August on a recommendation from a family friend. He paid her about $1,900 for an inspection, appraisal and loan modification for his home in the 2000 block of Southwest 90th Avenue. [...] On Jan. 16, police met with Chica and Bouza at Chica's home.
• Bouza offered to return to Chica most of the funds, $1,400, saying she didn't think she needed to give a reimbursement for work she already had done. [...] But Chica insisted on a full refund, refusing to accept the $1,400 offer.
• Miramar police in February were told by the state Office of Financial Regulation that Bouza didn't have a valid license for loan modifications through its office, the police affidavit said. Police subsequently provided the results of their investigation to the Broward State Attorney's Office, which resulted in charges against Bouza.

For the story, see Woman accused of accepting loan-modification work without a license.

An Inside Look At The Wells Fargo Foreclosure Factory

The following excerpt is taken from an MSNBC report on the inner workings of the foreclosure document mill at Wells Fargo:

• The Wells Fargo worker, who first contacted msnbc.com via email in late January, told of a wide range of concerns about the foreclosure documents she processes. Some families apparently were denied loan modifications after only cursory interviews, she said. Other borrowers applying for help sent comprehensive personal financial documents to a fax machine that she discovered had been unattended for weeks. Others landed in foreclosure after owing interest payments of as little as $1.18 a day, according to documents she said she reviewed.
• The legal process specialist asked not to be identified because she was not authorized to speak about the internal workings of the department, where she has worked since last year. Her account was supported by company documents and by a co-worker in the same office.
• "There was one file where they weren't even past due and they were in foreclosure status," the loan processor said. "They're pushing these files and pushing these files....”

***

• Sweeping enforcement actions a year ago by the nation's top banking regulators, and a recent settlement among 49 state attorneys general, the Department of Justice and other federal agencies with the five biggest mortgage lenders, were supposed to fix the system. Mistakes are likely still getting through, according to Wells Fargo employees.

For more, see Inside the foreclosure factory, they're working overtime.

NYC Renters In Multi-Unit Buildings, Tenant Advocates Left Dealing With Mess Created By Overleveraged, Absentee Landlords Who Cluelessly Jumped Into Real Estate Speculation At Height Of Housing Bubble

In The Bronx, New York, The Atlantic Cities reports:

• Foreclosure came to 553 East 169th Street in the Bronx in November of 2010. No doubt hundreds of other dwellings nationwide were foreclosed on that month, contributing to the raft of vacant, unkempt single-family homes with which so many cities are now stuck. But 553 East 169th Street isn't empty. Eighteen families still live there. As renters, New York law allows them to stay put, since they weren't the ones who had a problem with the bank. Their landlord did.
• These people – the renting tenants of foreclosed apartment buildings – are among the least-recognized casualties of the housing crisis. “These are individuals who have never once taken out a loan,” says Celia Weaver, an organizing and policy advocate with the Urban Homesteading Assistance Board in New York.
• New York City has the highest renter rate in the country, with 69 percent of all households renting, and so the mess of foreclosed multi-unit residences is particularly ugly here. Between January of 2010 and December of 2011, Weaver says more than 400 multi-family buildings fell into foreclosure in the city, mostly in central Brooklyn and the Bronx, affecting about 6,600 apartments. Some of these buildings are as small as six units, others as large as a hundred.
• So what eventually happens to properties that still have tenants but no permanent owners? For starters, the rats move in.

***

• Buildings that have gone into foreclosure are transferred to court-appointed receivers (read: “politically connected lawyers,” Weaver says). They’re charged with collecting rent and making repairs. But the reality is that most of these apartments, built in the 1920s and '30s, began falling apart long before a receiver showed up.
• Landlords in fear of foreclosure, after all, are more likely to funnel rent checks at mortgage payments than leaky roofs. And a temporary receiver isn’t motivated to make long-term investments in a property, like say a new boiler or broken ductwork. “They’re not good at maintaining these buildings,” Weaver says. “That’s not really their goal. They don’t own the property. So there’s basically no accountability.”

***

• Weaver’s organization has been working with the tenants here and in other buildings in the city to find responsible new owners (perhaps the tenants themselves?) and to push banks into taking financial responsibility for maintaining these places in the meantime.
• A lot of these buildings originally went into foreclosure, even though they house rent-paying tenants, because they were overleveraged at the height of the housing boom by speculators who hoped to drive out rent-regulated existing tenants in favor of newer ones who could be charged much more.
• “So much of the news around this foreclosure crisis has been focused on getting low-income homeowners the opportunity to get back into their homes,” Weaver says. “This is not exactly what we’re fighting here. We don’t want to get the building back to the slum lord who speculated it.”

For the story, see What Happens to a Foreclosed New York Apartment Building?

Tenants Commandeer Control Of 9-Unit Building After Clueless Absentee Landlord Gets In Over His Head & Abandons Premises, Leaving Mortgage, Utility Bills Unpaid; Residents Look To Form Co-Op, Acquire Title

In The Bronx, New York, the New York Daily News reports:

• Some tenants in slum buildings with rats and leaks stop paying rent. Others move out, complain or ask for handouts. But when their Bronx tenement crumbled due to landlord neglect, the tenants at 943 E. 179th St. banded together to collect rent and make repairs.
• Now they boast new kitchen cabinets, refrigerators, stoves, walls and floors, and they could become homeowners soon. With help from the Urban Homesteading Assistance Board, the tenants hope to buy their beloved West Farms building outright and form a co-op.
• Department of Housing Preservation and Development officials harbor concerns about tenants performing renovations without permission rather than letting the city force landlords to make repairs. But Jacqueline Rodriguez and her neighbors were tired of waiting. "Most of the people here have been here a long time," said Rodriguez, tenant association president. "They don't want another landlord. No one is going to take care of the building better than the people who live here."
• Tucked between E. Tremont Ave. and the Bronx Zoo, 943 E. 179th St. began to deteriorate in 2007, after a Hamptons-based landlord purchased the four-story walkup, said Rodriguez, 32, a recreational therapist who grew up in the building.
• Broken pipes and windows went unmended and cockroaches swarmed to the slum. The 9-unit building still has 248 open housing code violations. It entered foreclosure in 2008, with Lehman Brothers holding the mortgage: a nightmare scenario, said Kerri White, UHAB organizer.
• "There were no repairs at all," said Rodriguez, 32, a mother of twin infants. "We suffered without hot water for six months and without heat for months…You pay your rent and you don't know where the money is going."
• The tenants found out about the foreclosure in 2010, when they were instructed to pay their rent to Con Edison via city marshals. Their landlord owed the utility $38,000, Rodriguez said. The revelation spurred Rodriguez and her neighbors to form a tenants association and corporation. They opened a bank account to hold their rent in escrow.
• In five months under the new system, the tenants have used their rent money to remodel several kitchens, buy new appliances and hire an exterminator. "When I got here there were roaches and rats all over, in every crevice," said exterminator Major Meyers of Complete Enterprize. "Now there are minimal issues."
• Several tenants who boast carpentry skills have donated their time and Rodriguez has taught some English to neighbors who speak only Spanish. The building "feels like a family" now, she said. Meanwhile, HPD has completed $80,714 in emergency repairs, and helped with boiler oil. The building --controlled by Lehman-affiliated mortgage holder 745 Special Assets LLC , and Aurora Bank -- could head to foreclosure auction soon.

For the story, see Determined West Farms tenants band together to fix up neglected Bronx slum building, work to form co-op.

Tenants Resort To Rent Strike To Get Necessary Services At Foreclosed 32-Unit Building That Lingers In Receivership Limbo Since 2008

In Chicago, Illinois, CBS-TV Channel 2 reports:

• Tenants staging a rent strike at a foreclosed, 32-unit apartment building in the Austin neighborhood have a new receiver – and they are finally beginning to see some repairs. But the leader of the strike said Thursday that it may be “months” before the tenants agree to pay rent again.
• "Before, people have started working, but they’ve stopped,” said Pamela Johnson, who lives in a second-floor apartment at 5159 W. West End Av.  “So until everything is done in this building, we can’t afford to pay rent.”
• The tenants say they consider the building, at 5141-59 W. West End Ave., a microcosm of what can go wrong when a bank forecloses on an apartment building. The building has been in receivership since 2008.

For more, see Rent-Striking Tenants In Troubled Building See Improvements Made.

Yankee Stadium Parking Garage Nears Foreclosure As Fans Opt For Cheaper Sites, Subway Schlep; Bondholders Backing Project May Be Left Holding The Bag

In The Bronx, New York, WNBC-TV Channel 4 reports:

• On the day of the Yankees home opener last week, the stadium was packed with more than 49,000 fans, but inside a nearby parking garage on 153rd Street, three of the four floors were empty. Parking cashier Janee Addison estimated about 20 percent of the 2,300 spots were actually being used, and that was during the third inning, when even the latecomers had scanned their ticket.
• The garage, along with about a dozen other lots and garages, was built with millions of dollars in tax-free bonds by a firm called Bronx Parking Development Company, to accompany the new stadium. Last year, the Bronx Parking Development Company's average game-day lot was 43 percent full. This year, on the day of the Yankees' home opener, the garages increased the price of a parking space by $12 to $35, amid the sluggish demand.
• On March 23, the company filed paperwork with the Securities and Exchange Commission notifying them that it will likely default on its tax-free bonds within 60 days.
• Joyce Hogi, a South Bronx resident who lives near the stadium, is not surprised. According to Hogi, many Yankees fans began opting last year to park in a garage attached to a nearby shopping center. It is cheaper, she said, and nearly as close to the stadium. And unlike the garages owned by Bronx Parking, the shopping center garages don't kick out fans two hours after games end.

***

• The company was able to strike a deal last year with private bondholders to delay foreclosure on the garages. It is unclear if the bondholders will grant another waiver this year.

For the story, see Bronx Garage Near Yankee Stadium Nearly Empty on Home Opener (Neighbors say the garage, built with millions of dollars in tax-free bonds, was a wasteful project; On the day of the Yankees home opener, more than 49,000 fans packed the stadium. The skies were clear. The No. 4 subway was crowded. But the garage was nearly empty).

Frustrated, Embarrassed Town Votes To Unload Title To Empty Jail Onto Stiffed Bondholders After Nationwide Search For Prisoner/Occupants Yields Squat; Desperate Request To House Guantanamo Terror Suspects Nixed

In Hardin, Montana, the Great Falls Tribune reports:

• Economic development officials in Hardin voted Tuesday to relinquish control of a $27 million jail that was built with the promise of economic development, but brought only frustration and embarrassment to the southeastern Montana town in the five years since it was built. The board of Hardin's Two Rivers Authority voted unanimously to transfer the title to the 464-bed jail to the bondholders who financed the project. The bondholders still must approve the transfer.
• Two Rivers chairman Bill Joseph said the board made the decision in an effort to get the jail open. "If we can give them back the title and someone can come in here and buy it, and this will help get it open faster, then we are all for it," Joseph said. Two Rivers is hoping the transfer will take a month or less, said executive director Jeffrey McDowell.
• McDowell said bondholders "ran out of patience" with the city's efforts to put the jail to use and wanted to assume control over the 92,000-square-foot jail on 40 acres rather than go through the foreclosure process. The jail was built at a time when state and local governments didn't need additional jail space.
• After looking for prisoners from Vermont to Alaska, local officials became so desperate to put the jail to use they nearly turned it over to a convicted con artist who promised to turn it into a military training camp. They also sought unsuccessfully to house terrorism suspects being held by the military at Guantanamo Bay.
• The privately operated facility defaulted on its bond in 2008, forcing authorities to dip into the jail's construction loan to meet its debt payments. The last of those payments was made in late 2008, McDowell said.

Source: Developers turn over empty Hardin jail to bondholders.

Foreclosure Led To Problems With Unburied Bodies, License Revocation: Funeral Home Operator

In Wadesboro, North Carolina, The Associated Press reports:

• An Anson County funeral home operator has lost her operating license after regulators say she left unburied bodies lingering for up to five months. The North Carolina Board of Funeral Services revoked the operating permit for F&M McLendon Funeral Home in Wadesboro and the license of its operator, Mary McLendon. Funeral home operators face criminal citations if they try to provide services without permits.
• McLendon denies the claims and says the problem with unburied bodies happened when her funeral home was in foreclosure. Police evicted McLendon after finding three bodies there in 2010. The state funeral services board says the deceased had been dead between one month and five months. The bodies were sent to another funeral home for cremation and funerals.

Source: NC funeral home loses license for old bodies.