Saturday, May 26, 2012

Court Slams Brakes On Suspected Loan Modification Racket's Claim Of Affiliation With Nationally-Recognized Non-Profit To Scam Homeowners In F'closure

Non-Profit Quarterly reports:
  • A federal judge has ruled that home loan company First One Lending Corporation may not continue to present itself as affiliated with the Neighborhood Assistance Corporation of America (NACA), which describes itself as “a non-profit, community advocacy and homeownership organization.”

  • NACA was granted a preliminary injunction by U.S. District Judge David Carter. According to the lawsuit filed by NACA, First One has been claiming that it is affiliated with the nonprofit in order to help itcheat desperate homeowners facing foreclosure.”
***
  • NACA alleges that First One is charging for a service that NACA provides for free while trying to benefit from the NACA name in the process. According to the injunction ruling, First One is now prohibited from “making a number of specific false or misleading statements it currently uses to perpetuate their deceptive scheme.”

  • We found this passage from Judge Carter’s ruling particularly interesting: “All too frequently, intellectual property disputes between two faceless entities can make the judiciary appear to the public like a mere handmaiden to corporate interests, blessing corporations’ efforts to commodify an ever-growing swath of the nation’s intellectual capital. This case is a refreshing reminder that the policy justification for trademark law is to protect human beings, not corporations.”

  • It’s also a reminder to nonprofits to be on the lookout for those who might seek to use their good name for less than noble purposes.
See also: Courthouse News Service:
Go here for:

Illegal Tax-Dodging Homestead Exemption Claims Skyrocket; Local Teachers Union Proposes Amnesty Program To Raise Cash, Minimize Membership Layoffs

In Miami, Florida, The Miami Herald reports:
  • The teachers union in Miami-Dade County has proposed what could be an innovative way to raise extra money for education: A tax amnesty program that would go after homestead exemption cheats.

  • At a news conference Tuesday, the United Teachers of Dade announced plans to push for a pilot program that would encourage residents to come clean that they are illegally claiming homestead exemption - a tax break of up to $50,000 for those whose Florida property is their full-time residence.

  • UTD President Karen Aronowitz said the amnesty would be accompanied by an advertising campaign linking tax evasion with the negative effect on school funding, and would be followed up with higher penalties. "Teachers hate cheaters," Aronowitz said. "If people pay their taxes we can pay our teachers."

  • Exactly how much a tax amnesty could raise is debatable. Miami-Dade Property Appraiser Pedro Garcia said homestead exemption fraud liens have grown from about $2.7 million in 2007 to $14.5 million so far this year. That is driven by two factors: A poor economy leading more people to cheat and increasing the number of detectives investigating fraud cases.

  • But James DiBernardo, a retired major with the Miami-Dade County Police who investigated economic crime, believes those numbers are much higher. Whereas Garcia estimates there are upward of 400 deceased people claiming homestead exemption on the tax rolls, DiBernardo said that number is actually about 12,000. Most of those cases involve relatives of the deceased who now live in the home but have not changed the ownership.(1)

  • DiBernardo consulted with three private companies and said each provided similar figures. In all, DiBernardo estimates $280 million is owed in back taxes, 40 percent of which would go toward education. In addition to the 12,000 deceased residents, he believes there are about 20,000 residents who are renting properties but still claiming them as their full-time residence.

  • "I'm uncovering a lot more than I ever expected," DiBernardo said of the fraud cases.

(1) My guess is that there is also a 'ton' of recently-foreclosed homes once owned by exemption-claiming homeowners that have now been acquired by banksters who have conveniently failed to file the appropriate change in the properties' homestead status, thereby enabling them to improperly continue pocketing the tax benefit.

C. Fla. County Official: New System For Taking Online Applications For Real Estate Tax Benefits On Homestead Exemption Claims Virtually 'Fraud-Proof'

In Pasco County, Florida, The Pasco Tribune reports:
  • For years, Pasco Property Appraiser Mike Wells resisted the idea of allowing homeowners to file online for a homestead exemption. "Other counties have tried it, and there were always flaws," he said.

  • But Wells, who is running for his fifth term, said his office has developed an online application that is virtually "fraud-proof." The new application system started Thursday.

  • The Property Appraiser's Office reviews 10,000 to 14,000 new homestead exemptions a year. Wells said he hopes the new online application will reduce the amount of office work involved in the reviews. Applicants must fill out personal information, such as the driver's license number, voter identification and Social Security number, and the program will compare the information with state and national databases.

  • "It's completely automated," he said. "The system reviews the input of information online in real time. So if you give the wrong driver's license number, it's going to stop."

Nev. High Court OKs HOA Squeeze On F'closure Purchasers; Says State Regulator Erred In Capping 'The Clip' On Association Assessments, Collection Costs

In Las Vegas, Nevada, Vegas Inc. reports:
  • Nevada homeowner associations and their collection agencies have prevailed in the latest court ruling in disputes over collection costs for unpaid HOA assessments.

  • The Nevada Supreme Court on Wednesday ruled the state Financial Institutions Division (FID) was wrong to cap the assessments and collection costs that purchasers of foreclosed homes must pay. These assessments and costs typically accumulate for months while the homes sit vacant during the foreclosure process.

'The Swine Stays!' Says Judge To HOA; Well-Behaved Wilbur The Pot-Bellied Porker Dodges Boot As Effort To Evict Beloved Family Pet Deemed 'Not Kosher'

In Spring, Texas, KPRC-TV Channel 2 reports:
  • Monday, a judge ruled a Spring family can keep their pet pot-bellied pig, Wilbur, in their home. "Relief," said Missy Sardo, Wilbur's owner. "It's unbelievable."

  • Wilbur's owners, the Sardo family, have been fighting this battle for more than a year now. They said their pet pig is part of the family. "It's like one of my kids, only more well-behaved," said Alex Sardo. "I would do anything for him."

  • The family said their homeowner's association was objecting to Wilbur. They said The Thicket at Cypresswood Community Improvement Association told them they were in violation of deed restrictions. The family was ordered to get rid of Wilbur or face a possible foreclosure and hefty fines.

  • Monday, the judge ruled in favor of the Sardo family, granting their little piggie the right to stay in his home. "Don't let your HOA push you around," said Missy Sardo. The family celebrated the win with Wilbur in their home. They gave him an extra special treat of carrots and his favorite food, strawberries.

  • Wilbur is a popular pig with thousands of Facebook fans: https://www.facebook.com/#!/WilburSardo. He also has a website www.wilbursardo.com with a live web cam.
Source: Family wins legal battle to keep pet pig (HOA told family to get rid of pig or face foreclosure).
For the court's ruling, see Sardo v. The Thicket At Cypresswood Community Improvement Association, No. 2011-51454 (Dist. Ct. Harris County, May 7, 2012).
Go here for the deposition of Spring, Texas veterinarian Robert L. Rogers, whose testimony contrasting the difference between a "household pet" and "livestock" (ie. an 'ordinary farm pig') was apparently found to be persuasive by the court.
Go here for Wilbur's lawsuit against the HOA, and here for the court papers in which Wilbur outlines his case, and includes appellate case law citations and affidavits from Wilbur's expert witnesses in support of his position, as well as his responses to the Association's objections.
Representing Wilbur in his successful battle against his homeowners' association were attorneys Mitchell Katine and Benjamin Ha of Katine & Nechman LLC, Houston, Texas.
Editor's Note: No word yet from Wilbur as to whether he will be awarded prevailing party attorneys' fees and costs under the Texas Uniform Declaratory Judgment Act (which the court explicitly makes reference to in its ruling), the tab for which the homeowners' association would be left holding the bag (it sure sounds like Wilbur dragged the HOA through a 'pig sty' when he brought his grievances to court and, given the way this case appears to have been litigated by his advocates, the homeowners' association may be in for another major $lam).

Friday, May 25, 2012

Among Victims Scammed By Mortgage Fraud Conspiracy Were Home Sellers Who Had Their Equity Financed Out From Under Them In Owner Financing Ripoff

In Panama City, Florida, the News Herald reports:
  • The grand jury indicted Maurice Bates for wire fraud in the nick of time, enabling a trial jury Wednesday to find him guilty of defrauding lenders out of more than $1 million.

  • The indictment was filed Dec. 6, 2011, only seven days before the statute of limitations would’ve expired. Judge Richard Smoak ruled Wednesday that a check that was cashed on Dec. 13, 2006 constituted the final act of a conspiracy to commit wire fraud after Bates’ attorney, Tonya Higgins, rested her case without calling a single witness and asked Smoak to dismiss the charge.
***
  • [The conspirators] defaulted on every loan they received. Most of the homes they bought have been foreclosed on, and the rest are only waiting for a final judgment. In a couple cases, the sellers agreed to loan money to the buyers and were named as defendants in foreclosure proceedings.

  • Marie Beamer is one of them. The 81-year-old Beamer took the witness stand Wednesday to tell the jury how her Realtor convinced her that it was a good idea to loan $100,000 to the group who bought her home in Bay Point in 2006.

  • She expected to receive $733 every month, but after about six months the checks stopped showing up.

  • Littleton asked Beamer what she would’ve done with that $100,000. “I would have saved it for retirement and then I wouldn’t have work today,” Beamer replied. After she said it, a juror looked down at the floor and shook her head.

  • Of the $100,000 Beamer lost, $83,000 ended up in a bank account that Bates controlled. Add that to the money skimmed off the bank loan, and Bates cleared nearly $200,000 from the deal to buy Beamer’s house. “Cases like this are about people like Marie Beamer,” [Assistant U.S. Attorney Gayle] Littleton told the jury.
For the story, see Man guilty of fraud (He faces up to 20 years in prison for mortgage scam).

Attorney Agrees To Disbarment After Admitting To $1.1M Client Ripoff; Victims Promised Loan Mods, Discounted M'gage Payoffs For Pennies On The Dollar

The State Bar of California recently announced:
  • A Los Angeles attorney accused of misappropriating $1.1 million from 10 clients has agreed to be disbarred, the State Bar announced [].

  • In one of the largest misappropriation cases ever handled by the Office of Chief Trial Counsel, Vafa Allan Khoshbin [bar# 165486], 52, had promised clients he could get their first mortgages modified and their second mortgages settled for pennies on the dollar.

  • The clients gave him money, which was deposited either to his client trust account or to his business account. But the cash disappeared before Khoshbin did any loan modification work or made any payments to banks on his clients’ behalf, according to a stipulation approved Wednesday by the State Bar Court.

  • One couple, Sharooz and Fariba Arianpour, turned over $357,000 thinking it would be used to settle a second mortgage and a loan they held on a car wash.

  • Koshbin will be placed on involuntarily inactive status May 5 until the California Supreme Court acts on the disbarment recommendation. Khoshbin also agreed to pay restitution plus interest of 10 percent per year.(1)

  • In mitigation, Khoshbin was experiencing family and financial problems. Khoshbin also said he inappropriately surrendered his authority to a non-attorney who was handling finances for the firm, Debt Relief Law Center.

  • Khoshbin, who was admitted to practice in 1993, also received a public reproval Feb. 13 for failing to follow through with a client’s lawsuit against a mortgage lender and failing to refund $5,000 in attorney fees. The case was prosecuted by Senior Trial Counsel Suzan J. Anderson.

(1) Homeowners ripped off by the dishonest conduct of a California attorney (including a failure to refund unearned legal fees) who want to recover their money can apply for possible restitution from the Client Security Fund of the State Bar of California (see also Can the Client Security Fund Help You?).

For earlier posts referencing California's Client Security Fund in the context of loan modification ripoffs, see:

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

Lone Star Firm Tags F'closed Calif. Borrowers For Unpaid 2nd Mtgs; Homeowners' Lawyer: Outfit Nothing More Than "People In Texas Acting As Vultures!"

In Southern California, Rick Jurgens of California Watch reports:
  • Adding new uncertainty in the state’s ongoing mortgage crisis, a Texas company is aggressively pursuing hundreds of Californians to collect second-mortgage debt – on homes they’ve already lost through foreclosure.

  • Many of these former homeowners believed their mortgage debt had been erased after their houses were taken by banks and lending companies. But the Texas company, Heritage Pacific Financial, has pursued collections and filed lawsuits claiming those debts still linger.
***
  • Critics of Heritage Pacific say the company’s central tactic is forcing settlements from people who can’t afford a drawn-out legal fight and who don’t know the details of California law. The company has sued people with second-mortgage debts of less than $150,000, despite a state law prohibiting lawsuits alleging fraud on mortgages below that amount.

  • Heritage Pacific’s collection methods now face legal challenges, including a class-action lawsuit in Santa Clara County Superior Court that contends that the company is carrying out an “insidious and illegal debt collection scheme.”
***
  • By demanding payments from more than 1,000 individuals in California, the lawsuit contends, Heritage Pacific has violated “the rights of those who have already suffered the emotional and financial distress that results from the loss of their foreclosed home.”

  • Heritage Pacific is nothing more thanpeople in Texas acting as vultures,” said Will Kennedy, a lawyer in the class-action suit.
***
  • Heritage Pacific’s first big foray into California came in U.S. District Court in Los Angeles, where in a three-month period beginning in December 2009, Heritage Pacific filed three lawsuits seeking $46 million in actual and punitive damages from 158 defendants who took out 143 loans.

  • Meanwhile, Heritage Pacific opened another front in California state courts. California Watch reviewed online records in 10 of the state’s 17 largest counties and found 365 lawsuits in which Heritage Pacific was a party. Heritage Pacific also has filed 226 cases in federal bankruptcy courts in California.

  • This story was produced by California Watch, the state’s largest investigative reporting team. It is a part of the independent, nonprofit Center for Investigative Reporting. For more, visit www.californiawatch.org. Jurgens can be reached at rjurgens_2000@yahoo.com.

Arizona High Court: OK For Banksters To Stiff Homeowners On 'Show Me The Note' Requests When Proceeding With Foreclosure

From the law firm Ballard Spahr LLP:
  • Arizona’s non-judicial foreclosure statutes do not require the beneficiary to prove its authority or “show the note” before a trustee may commence a non-judicial foreclosure, the Arizona Supreme Court has ruled.

  • The May 18, 2012, decision in Hogan v. Washington Mutual Bank, N.A. et. al should have a significant impact on pending and future mortgage foreclosure-related litigation in Arizona, as it flatly rejects a legal theory frequently advanced by borrowers in an attempt to avoid foreclosure.

  • Sitting en banc, the court was asked to decide whether Arizona law permits a trustee to foreclose on a deed of trust without the beneficiary first having to show ownership of the note that the deed of trust secures.

Thursday, May 24, 2012

Unwitting Borrower Has Home Foreclosed Out From Under Her Despite Three Approved Loan Modifications; 'Sleeping' Servicer: 'We Know Nothing About It!'

In Park City, Utah, KSL-TV Channel 5 reports:
  • Georgene Clotfelter recently hired a realtor to sell her Park City home, but was surprised to find out country records showed she no longer owned it. When she contacted her mortgage lender, Chase Bank, she says a representative told her the bank had no record of a sale.

  • "I don't even want to hear the word bizarre anymore, because everybody I talk to uses the word bizarre," Clotfelter said. "It's stupid. It really is stupid." Having spent decades working in the mortgage finance business, Clotfelter said she's yet to see anything like the mess she finds herself in today.

  • The problems began back in 2009 when she was having trouble making her mortgage payments and began the process of applying for a loan modification. To be eligible for a modification, she said the bank told her to skip mortgage payments, declare hardship, and go into default.

  • Since 2009, Clotfelter says Chase has approved her for three different loan modifications.

Federal Appeals Court: OK To Use 'FDCPA-Hammer' On Attorneys Hired For Mere Enforcement Of Security Interest Through Non-Judicial Foreclosure

From the law firm Burr & Forman, LLP:
  • The Eleventh Circuit Court of Appeals released an opinion earlier this month that could give foreclosure lawyers cause for concern.

  • In Reese v. Ellis, Painter, Ratterree & Adams, LLP, No. 10-14366, 2012 WL 1500108 (11th Cir. May 1, 2012), the Eleventh Circuit ruled that a foreclosure firm conducting a non-judicial foreclosure could be liable under the Fair Debt Collection Practices Act (“FDCPA”) for sending homeowners correspondence that includes false or misleading information.

  • This decision may call into question the protection that foreclosure firms have enjoyed under existing case law holding that mere enforcement of a security interest through non-judicial foreclosure is not debt collection activity under the FDCPA.
For the ruling, see Reese v. Ellis, Painter, Ratterree & Adams, LLP, No. 10-14366, 2012 WL 1500108 (11th Cir. May 1, 2012).
Editor's Note: This case was brought as a putative class action.

Fed. Appeals Court: OK To Hammer Bill Collectors Making Automated Calls To Wrong Cell Phone Subscribers; Numbers Were Reassigned To Unintended Targets

In Chicago, Illinois, Legal Newsline reports:
  • A federal appeals court ruled last week that bill collectors can be sued for costly, automated calls made to the wrong cell phone subscribers. [...] At the center of the case is the federal Telephone Consumer Protection Act, the law governing the conduct of telephone solicitations and telemarketing.

  • In particular, the TCPA restricts the use of automatic dialing systems, artificial or prerecorded voice messages, SMS text messages received by cell phones, and the use of fax machines to send unsolicited advertisements.

  • The act also curtails the use of automated dialers and prerecorded messages to cell phones whose subscribers often are billed by the minute as soon as the call is answered. Routing a call to voicemail counts as answering such a call.

  • As the Seventh Circuit noted, an automated call to a landline phone is simply an annoyance, but the same call to a cell phone adds expense to the annoyance.

  • In this case, dozens of automated calls were made to two cell phone numbers, which went to voicemail, consuming minutes from the current subscribers' plans. All of the calls were made in an effort to reach previous subscribers to the numbers, whom agreed to receive the calls.

  • The "bystanders" or current subscribers, Teresa Soppet and Loidy Tang, sued Enhanced Recovery Company LLC, a bill collector for AT&T, contending they never consented to receive the automated or recorded calls.

  • In all, Enhanced Recovery called Soppet's number 18 times and Tang's 29 times trying to reach the previous subscribers, whom provided AT&T with the cell phone numbers as a way to contact them at least three years prior.

  • Enhanced Recovery argues that the previous subscribers' consents to be called at the cell phone numbers remained in force even after the numbers were reassigned to Soppet and Tang.

  • The district court disagreed, saying that only the consent of the subscriber assigned to the cell phone number at the time of the call, or perhaps the person who answers the phone, justifies an automated or recorded call. The court then certified the issue for interlocutory review by the Seventh Circuit.

  • In its 12-page opinion, the Seventh Circuit affirmed the lower court's ruling, concluding that the so-called "called party" is the cell phone number's current subscriber, not the person the debt collector is trying to reach.
For the appeals court ruling, see Soppett v. Enhanced Recovery Company, LLC, No. 11-3819 (7th Cir. May 11, 2012).
For the earlier ruling of the lower court, see D.G. ex rel Tang v. William W. Siegel & Associates, Attorneys At Law, LCC, 791 F.Supp.2d 622 (N.D. Ill. Eastern Div. 2011).
Editor's Note: This case was brought as a putative class action lawsuit (go here for the lawsuit).

Wednesday, May 23, 2012

Brooklyn Man Gets 13 To 41 Years For Impersonating Dead Mom To Recover Home Lost In Foreclosure & Pocket Her Social Security Benefits

In Brooklyn, New York, The Village Voice reports:
  • A Brooklyn man who dressed up as his dead mother to commit real estate and social security fraud was in court this afternoon where he was sentenced to some rather lengthy prison time after getting found guilty last month of multiple dressing-as-your-dead-mother-to-scam-people-related crimes.

  • [Thomas] Parkin, 51, was sentenced to a total of 13 2/3 to 41 years in prison for a scam in which he attempted to convince the government that his mother was alive so he could regain ownership of her home, which was sold at auction after Parkin was unable to pay the mortgage.

11th Hour Phone Call To Baltimore Councilman Helps Homeowner Dodge Foreclosure After City Loses Another Check For Real Estate Tax Payment

In Baltimore, Maryland, The Baltimore Sun reports:
  • Kristina Suson's home wasn't part of the city's tax sale Monday, but it was a close call.

  • Baltimore places liens on properties for unpaid property taxes, water bills and other municipal debts, then puts the liens up for auction every spring — allowing investors to buy them and either collect or move to foreclose. The city auctioned liens on about 10,600 properties on Monday, finding buyers for 6,545 of them and raising $20 million.

  • Suson ended up on this year's list, to her surprise, after the state retroactively reduced a property tax credit she'd received in 2009. Her mortgage servicer sent a check for the $2,100 tab in late April, but the Finance Department still hadn't processed it as the auction date neared. That's because the city lost the check. But no one told Suson that.

  • "When I would call and ask, they'd say, 'It takes two weeks, it'll be processed in two weeks, don't worry about it,'" said Suson, a pediatric urology fellow. Her Patterson Park home was taken off the tax-sale list Thursday after she contacted City Councilman James B. Kraft's office to plead for help.

  • Janice J. Simmons, chief of the Finance Department's Bureau of Revenue Collections, said in an email that the office's FedEx tracking list shows the check was received, but "it is lost internally." Staffers taking calls about tax-sale payments had no way of knowing, she said, which is why they kept telling Suson that it would eventually be processed.

  • "The check was misplaced between departments after being logged in," Simmons said. "We are revising our internal protocol to ensure that checks remain in the original tracking envelope and that each department that handles the check has to sign for the check."
***
  • [City Councilwoman Mary Pat Clarke has] received a lot of frantic calls over the years from homeowners in a fix, occasionally because the city didn't properly account for their payments. "Things get lost in the shuffle," Clarke said.
For more, see Baltimore homeowner almost ends up in tax sale after city loses check (Home removed just in time from city auction of tax liens on 10,600 properties).

Another County Joins In Attack On MERS' Scheme Allegedly Contrived To Stiff Municipal Recorders' Offices Out Of Recording Fees On Mortgage Transfers

In Belleville, Illinois, The Associated Press reports:
  • An Illinois prosecutor is suing 22 local and national banks and mortgage companies, accusing them of deceit and fraud in using an electronic mortgage registry to sidestep recording fees his county should have been collecting.

  • St. Clair County State’s Attorney Brendan Kelly contends the lenders engaged in fraud and deception by failing to file documents with the county’s recorder of deeds.

  • The lawsuit claims that the companies used an electronic mortgage database system called the Mortgage Electronic Registration Systems Inc. that tracked the transfers of loans between lenders and Wall Street securities entities, thereby eliminating the public’s ability to see the purchase and sale of properties through the traditional public records system.

  • Kelly said the county’s recorder’s office estimates that system allowed tens of thousands of transfers of title to take place without proper documentation.

Tuesday, May 22, 2012

RI Feds Score Guilty Plea From Now-Disbarred Closing Attorney In $600K Escrow Ripoff; Loot Intended To Pay Off Existing Liens In Mortgage Refinancings

From the Office of the U.S. Attorney (Providence, Rhode Island):
  • A former Rhode Island and Massachusetts mortgage attorney pleaded guilty in U.S. District Court in Providence [] to defrauding mortgage holders and lending institutions of more than $600,000. David L. Spector, 52, of Needham, Mass., admitted that he used the funds to operate a Ponzi scheme.
***
  • Spector pleaded guilty to three counts of wire fraud and one count of money laundering. He faces up to 70 years in federal prison followed by up to 3 years of supervised release, and a fine of up to $1,000,000 [...].
  • Spector admitted to the court that between April and October 2007, he conducted real estate mortgage refinance closings for properties in Plymouth and Lawrence, Mass., and Westerly, R.I. As part of the closing process, Spector had the proceeds of the mortgages obtained by his clients transferred to his attorney escrow account for the purpose of redistributing the funds to pay off existing mortgages and other costs associated with the closings.
  • Spector admitted that rather than properly distribute the funds, he used $601,962 to run a Ponzi scheme to pay his personal expenses and to pay off previous mortgages the he had failed to pay off.
  • Spector admitted that in order to keep his victims from learning of his scheme, he filed change of address forms with the mortgage companies that had not been paid off so that the bills would go to a post office box that he controlled.(1)
For the U.S. Attorney press release, see Former attorney pleads guilty to fraud and money laundering (Former mortgage attorney’s Ponzi scheme defrauded banks and customers of more than $600,000).
(1) The Rhode Island Bar Association's Client Reimbursement Fund was established to provide a public service and to promote confidence in the administration of justice and the integrity of the legal profession by providing some measure of reimbursement to victims who have lost money or property because of theft or misappropriation by a Rhode Island attorney, and occurring in Rhode Island during the course of a client-attorney relationship.
For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

Attorneys' Sleazy Practices Leave State Bar's Loan Modification Ripoff Task Force With Hands Full; Dozens Probed, Disciplined; 18 Disbarred

In Van Nuys, California, the Los Angeles Daily News reports:
  • Paulette Breen sensed something was wrong when her home loan modification made her mortgage payments more expensive. Suspecting fraud, the Van Nuys resident hired a lawyer to sort things out. That only made things worse.
***
  • Breen is among more than 1,000 potential victims of attorneys across the state who are targeting homeowners facing foreclosure as part of the fallout of the mortgage crisis that began in 2007. These attorneys charge fees with the promise of stopping the foreclosure, but then don't follow through with the case and disappear with the money, according to Laura Ernde, spokeswoman for the California State Bar, which has reported a spike in these types of cases.

  • Since 2009, the State Bar -- which created a task force in 2009 solely to focus on the issue -- has investigated 1,186 loan modification cases involving 153 lawyers, according to Ernde. So far, 69 attorneys in 581 cases have been disciplined and 18 cases have resulted in disbarment. About 720 cases are still pending and another 291 are under investigation.
***
  • But there are no hard numbers on just how many homeowners have been victimized. Oftentimes, victims are immigrants or from low-income families, and may not know where to turn for help after they've been scammed.

  • "Is it happening very frequently? Absolutely," said Charles Evans, an attorney with the Los Angeles-based Legal Aid Foundation, which provides legal help for the poor. "We have seen dozens of these folks each just over the last year and for every one of those, there are dozens more that don't end up coming our way."

  • Sometimes, it's ignorance. Some of the consultants are real estate brokers who switched over to law or attorneys who may not be familiar with foreclosure laws, according to Evans.

  • But often, it's more sinister. Evans has handled cases where attorneys will place liens on the home to secure money they think they're owed, taking advantage of immigrants' lack of English skills and getting them to sign over deeds.

  • "They're just playing the odds," Evans said. "The folks that they target are desperate, they're scrambling from place to place to try and save their home. They rarely take the time to file a lawsuit or file a complaint."

Suit: Trash-Out Contractor Swiped F'closed Homeowner's Work Tools From Adjacent Lot Not Part Of Sale Proceedings; Leaves Victim Unable To Earn Living

In Beaumont, Texas, The Southeast Texas Record reports:
  • A Jefferson County man has filed suit against the company that he claims refused to modify his mortgage after he faced financial hardships.
***
  • [Gregory James] Viator's property on White Perch Lane in Beaumont was sold on Aug. 3, 2010, to CMC, the suit states. Viator was given until Oct. 8, 2010, to vacate the premises, the complaint says.

  • Viator claims he moved all of his property onto an adjacent lot that was not subject to the foreclosure proceedings. However, when defendant Dana Bellanger was hired by defendant Federal National Mortgage Association to clean the property, he removed Viator's personal property from the adjacent lot, according to the complaint.

  • Although Viator has demanded return of his property, he has not yet received it back, the suit states. "Plaintiff, without his possessions, namely his work tools and equipment, is totally destitute and cannot perform his usual and normal trade to support himself," the complaint says.

  • In his complaint, Viator is seeking compensation for all tools and equipment that was destroyed and for lost wages. He is also seeking damages for his mental anguish, plus court costs, pre- and post-judgment interest and any other relief the court deems just.

Monday, May 21, 2012

Loan Mod Scammer Falls After Forcing Feds Thru 10-Day Jury Trial; Stands To Get Hammered For Screwing 100s Across Country Out Of Hundred$ Of Thousand$

From the Office of the U.S. Attorney (Manhattan):
  • Preet Bharara, the United States Attorney for the Southern District of New York, announced that ISAAK KHAFIZOV, a former owner of American Home Recovery (“AHR”), a mortgage loan modification business, was found guilty [] in Manhattan federal court of conspiracy, mail fraud, and wire fraud, in connection with a scheme to defraud distressed homeowners and lenders.

  • KHAFIZOV was convicted after a ten-day jury trial [...]. He was remanded into the custody of the U.S. Marshals following his conviction.

  • Manhattan U.S. Attorney Preet Bharara said: “Isaak Khafizov dangled false promises of relief to distressed homeowners who were trying to keep their homes, but instead, he repeatedly victimized them by stealing their money and forcing many of them into foreclosure. He will now face justice for the fraud that he committed against vulnerable and needy homeowners all over the country.”
***
  • After receiving up-front fees from the distressed homeowners, KHAFIZOV and AHR did little or no work to try to renegotiate the homeowners’ mortgages. And on those rare occasions when KHAFIZOV succeeded in getting a homeowner a mortgage modification, he typically did so by coaching the homeowner to lie about his or her income and assets on forms submitted to the mortgage-lender.

  • Because KHAFIZOV and AHR did not do the work they had promised and because KHAFIZOV specifically directed the distressed homeowners to stop paying their mortgages and to pay AHR its fees instead, many of AHR’s clients wound up in foreclosure. All told, KHAFIZOV and AHR defrauded hundreds of customers across the country out of hundreds of thousands of dollars in fees.

Scammer Gets 18 Months For Running Loan Modification Ripoff That Fleeced 80+ Homeowners Out Of $250K

From the Office of the U.S. Attorney (St. Louis, Missouri):
  • Marien Brown was sentenced to 18 months in prison, and ordered to pay approximately $250,000 restitution for falsely representing that she operated a “mortgage rescue” or “foreclosure rescue” service.

  • According to court documents, Brown, 42, Wentzville, Mo., also known as Marien White, owned and operated 1st Financial Resource, LLC, (First Financial) from September 2008 until March 2009, at which time the business became known as 1st Federal Resource, LLC (First Federal).
***
  • Brown researched and identified groups of vulnerable homeowners in Hawaii that were one or more mortgage payments behind, or were in imminent risk of home foreclosure, and sent out a large number of unsolicited mailings to prospective clients claiming that she operated a “mortgage rescue” or foreclosure rescue” service.

  • More than eighty clients responded to her mailings and wired funds to First Federal. Brown converted these funds to her own use. None of the client funds were ever sent to lenders. [...] Her scheme resulted in losses of approximately $250,000.

Arizona AG: Loan Modification Racket Used Multiple Ruses To Pocket Upfront Cash From Homeowners; Claimed Fees Were 'Church Donations'

From the Office of the Arizona Attorney General:
  • Attorney General Tom Horne announced [] that a complaint has been filed in Maricopa County Superior Court against Rosa Galope, of Surprise and Avondale, Arizona, alleging that she defrauded homeowners looking for help in obtaining mortgage modifications and saving their homes from foreclosure.
***
  • The lawsuit alleges that Galope charged thousands of dollars in advance fees for mortgage loan modification and foreclosure rescue services that she later falsely claimed were donations to her church, Nation to Nation Ministries.

  • The lawsuit also alleges that Galope prohibited her clients from communicating with their lenders and told them to send her any payments that they intended to go to their lenders, and that Galope would forward the payments to the lender.

  • The lawsuit alleges that rather than forwarding homeowners' payments to their lenders, Galope kept the funds for her own use, even endorsing checks made payable to lenders and cashing them at a local check cashing store.

  • The lawsuit further alleges that when Galope was unsuccessful in helping homeowners get a modification. She convinced them to give her thousands of dollars more, money that Galope said would be used as a down payment for the homeowners to repurchase their homes from an investor. [...] The lawsuit alleges that Galope kept the down payment money for herself and failed to refund it to homeowners when no investor deal occurred.
For the Arizona AG press release, see Horne Files Complaint In Mortgage Fraud Scam.

Alleged Scam Victims' Attorney: Mortgage Assistance-Peddling 'Guru' May Have Ripped Off $1M+ From Nearly 200 Connecticut Residents; Cops Yet To Act

In Wethersfield, Connecticut, The Hartford Courant reports:
  • An immigrant couple paid a Wethersfield man $18,600 to erase their debts by tapping into a little-known federal fund that they were told has money for anyone who knows the special, complicated way to apply for it, court records state. But no such fund exists, their lawyer Manuel A, Suarez said Monday. The fund is "fictitious," he said.
***
  • Suarez said his clients were struggling but current on their debts when they went to [Deowraj] Buddhu for advice in 2010, hired him and followed his guidance to stop paying on loans and apply for money to wipe out all their obligations. That advice caused the couple to fall into foreclosure, which they believed until a few months ago would be reversed by the secret fund, Suarez said.

  • In court, Judge Antonio Robaina said he needed time to review the motion and would notify all parties once he made a decision on the motion.

  • Outside court, Suarez said he has six clients who claim they were defrauded by Buddhu, a Wethersfield resident in his 60s who served time in state prison for his misdemeanor role in a counterfeit check case.

  • In court papers, Suarez says he's gotten information that Buddhu may have collected more than $1 million from as many as 200 clients who on his counsel stopped paying mortgages, car loans, credit card debts because the secret fund would pay off those obligations.

  • Buddhu has not been charged.

Sunday, May 20, 2012

Suit: BofA Charges Homeowner In Foreclosure For Court Costs, Then Fails To Give Refunds Despite Subsequent Receipt Of Reimbursement For Unused Amount

In Hamilton County, Ohio, the Cincinnati Enquirer reports:
  • A Madisonville woman sued Bank of America [...] for pocketing court fees from foreclosure cases that she says belong to homeowners. Kathleen Collins accused the bank of fraud, breach of contract, unjust enrichment and other violations in a class-action lawsuit filed in Hamilton County Common Pleas Court.

  • Collins’ attorney, Robert Newman, said the bank’s practice of keeping the fees could impact thousands of homeowners who should have been reimbursed money when their cases were resolved.
***
  • The lawsuit’s accusations revolve around court fees, typically about $550, which the bank is required to pay when filing a foreclosure action. Depending on the length and outcome of the litigation, a portion of those fees often is reimbursed to the bank when the case is over. The suit says that’s what happened in Collins’ case when the bank was repaid $29 of its original court costs.

  • The problem, according to the lawsuit, is that the bank added all of the original court costs into Collins’ new loan, so she would pay the costs instead of the bank. And when the court reimbursed the $29 in Collins’ case, the bank collected it and left the full original costs in Collins’ loan.

  • Newman said the bank essentially is double-dipping: Collecting the full amount of the court costs from homeowners and then keeping the reimbursement of unused court costs for itself.

  • The refund goes to the bank and the bank doesn’t fork it over,” Newman said. “There is a substantial amount of money owing to the class.” He said it’s impossible to know how much money is involved at this time, since individual reimbursements are relatively small, usually no more than a few hundred dollars.

  • The lawsuit asks the court to bar Bank of America from such practices and to repay any reimbursed court costs to Collins and, potentially, to thousands of other borrowers. The suit also seeks unspecified damages.

NYS Hearings On Banksters' Force-Placed Insurance Racket Begin; Homeowners Give Testimony Describing Alleged Abuses

In Albany, New York, The Associated Press reports:
  • Premiums for so-called force-placed insurance have more than tripled since 2004, producing enormous profits for insurers and the banks that take out policies when a homeowner fails to maintain coverage required by the mortgage, according to New York regulators.

  • In some cases, the premiums are "exponentially higher" than regular homeowners insurance and can push homeowners into foreclosure, Department of Financial Services Superintendent Benjamin Lawsky said Thursday at the start of public hearings on insurance rates. Such premiums rose from $1.5 billion in 2004 to $5.5 billion in 2010 during the U.S. housing crisis and have probably risen since, he said.

  • A handful of homeowners told regulators about insurance rates they were forced to pay that were up to three times higher than their original policies, making it harder to keep their homes. Some said they didn't get notices about the changes until they got higher bills for their escrow accounts.

  • Consumer advocates said similar stories were widespread, and that homeowners also end up with policies that don't cover their personal injury liability or their house contents.
See also, New York Daily News: 'Forced place insurance' gouging threatens to kick homeowners to the curb (State hears claims that banks are jacking up mortgage payments with possibly unwarranted insurance payments).

Homeowner Forced Into Hospital, Returns Home To Find Adverse Possession-Claiming Family On Premises; Judge Orders Suspect To Go To Trial

In Castle Rock, Colorado, CBS 4 reports:
  • A Douglas County judge has ordered a man who had been living in a million dollar home to stand trial on charges including trespassing and perjury. CBS4’s On Your Side Investigator Rick Sallinger has linked this case to at least a dozen other “stolen homes” across the area. The homes involved were under foreclosure and taken over by people who claim they have a legal right to do so under a law called “Adverse Possession.”

  • Sergio Hernandez was in court for a preliminary hearing after he was evicted from a million dollar mansion in the Bell Mountain Ranch subdivision near Castle Rock on March 22nd. Hernandez is charged with trespassing, perjury, offering false instrument and violation of a bail bond.

  • In March, Hernandez and his family members were forced to leave the four bedroom, five bathroom home at 1252 Rosewind Circle. All their possessions were hauled to the curb by bank hired movers. The true owner of the furniture inside the home remains the subject of debate.

  • The home was originally owned by Joyce Carroll, who tells us her furniture was still inside when Hernandez moved in. She went into the hospital, was unable to make payments, and Bank of America started foreclosure proceedings. When she was able to leave the hospital, she found strangers living inside a home she never fully moved out of.

  • That’s when Sergio Hernandez provided a document of “Adverse Possession”, which he claims gives him a legal right to live in the house.
***
  • Last Friday, Hernandez arrived in a U-Haul van to help move a family out of a $750,000 home in Larkspur. The home was occupied by a man named Gonzolo Perez, who is believed to be related to Hernandez.

  • In a similar fashion, Douglas County deputies were accompanied by a locksmith, who picked the lock to the home [...]. The bank-hired real estate agent helped haul Mr. Perez’s possessions to the curb. Hernandez refused to talk with us about his connection to this home.

  • But back in court, Detective Trindle made the link. He said he learned about Hernandez and the home in Castle Rock after investigating the house in Larkspur. Sergio Hernandez is due back in court on August 13th. Gonzolo Perez also has future court appearances scheduled.

Homeowner Facing Foreclosure Takes Two Month Trip, Returns Home To Find Premises Ransacked

In Palmdale, California, KABC-TV Channel 7 reports:
  • Shock and frustration for Palmdale homeowner Leroy McComb: He's speaking out about the distress of finding his home burglarized and trashed after a two-month trip. Leroy McComb certainly knows bad times. He lost his job in September. His house is in foreclosure. And he's going through a divorce. But none of that prepared him for a rude homecoming.

  • "The beds are all tore up, they stole the door off my daughter's bedroom," said McComb. "They stole the wiring off the side of the house to the junction box."

  • McComb says he went to visit his brother in Texas in February and when he returned two and a half months later he found his house ransacked, computer equipment stolen, furniture destroyed and trash scattered through every room.

  • "They took my pictures of my kids, they tore up memories," said McComb. "I don't have the nicest stuff in the world, but it was all I had in the world was in here. Now there's nothing left but trash and overturned furniture."