Loan Mod Fraud, Use Of Forged 'Conditional Approval' Letters In Phony Refi Offers Among Accusations That Bag Five; One Cops Plea, Gets Year In Jail

In Orange County, California, the Orange County Register reports:

• Andrew Michael Phalen was sentenced [] to a year in jail and five years of formal probation [] for his role in a scam that offered home loan modification assistance to struggling mortgage holders across the country.
  
  
• But four of the Mission Viejo 25-year-old's cohorts are looking at much more serious prison time for the scheme that relied on letters forged with CitiFinancial or CitiMortgage logos. Phalen's co-defendants are: Jacob John Cunningham, 25, of Irvine; Justin Dennis Koelle, 22, of Costa Mesa; Dominic Adam Nolan, 31, of Irvine; and John D. Silva, 27, of Irvine.
  

***

• All five allegedly sent promotional letters to people throughout the U.S. with offers to restructure their home loans, with references to the individual homeowner's specific lender and principal balance. Those who signed on were charged upfront fees for loan modification services, despite California having outlawed such charges on Oct. 11, 2009.
  
  
• Those who called a number on the letter were told they could get a complete refund of the fee if their loan was not modified, something that was unlikely, or so it seemed, because the company boasted a 95 to 100 percent success rate.
  
  
• But Phalen pleaded guilty to, and the others are accused of, taking the money people paid without securing loan modifications, and of failing to return or refund the fees.To hide the thefts, company names, addresses and phone numbers constantly changed.
  
  
• By late December 2011, more than 100 victims from California and other states had submitted complaints against the companies to various law enforcement agencies and better business bureaus, according to an OCDA statement.
  
  
• It was then that Cunningham, Nolan and Silva are accused of launching a new fraud. Forged "Conditional Approval" letters with CitiFinancial or CitiMortgage logos in the letterhead were sent to distressed homeowners offered interest rates of 2.8 percent or lower to refinance their loans. "Escrow Instructions" attached to the letters directed the homeowner to deposit between $3,500 and $4,600 directly into the bank accounts of the accused.
  

For the story, see Andrew Michael Phalen Gets Year in Jail for Home Loan Modification Scam.

For the Orange County District Attorney press release, see Man Sentenced For Defrauding Hundreds Of Victims In Real Estate Loan Modification Scam (Hundreds of fake letters with CitiFinancial or CitiMortgage logos sent as part of scam).

Fresno Feds Pinch Pair For Allegedly Running Loan Mod, Debt Consolidation Racket; Suspects Accused Of Using India Call Center When Targeting Victims

From the Office of the U.S. Attorney (Fresno, California):

• On May 31, 2012, a federal grand jury returned a 46-count indictment charging Sharanjit Kaur, 36, and Baljit Singh, 47, both of Fresno, Calif., with conspiracy, mail and wire fraud, and international money laundering, United States Attorney Benjamin B. Wagner announced following the defendants’ arrests [] in Fresno.
  
  
• The indictment alleges that between July 2010 and June 2011, Kaur and Singh owned and operated several companies based in Fresno, Calif. for the sole purpose of defrauding hundreds of customers throughout the United States. Kaur and Singh touted to potential customers that their businesses, Consumer Financial Services, Consumer Credit Repair, and Client Financial Services, could provide debt consolidation services.
  
  They also falsely promised that they could renegotiate debts with creditors and mortgage lenders, obtain low-interest loans for customers, assist in avoiding lawsuits, lower car payments, replace high-interest credit cards with low-interest ones, and correct errors in credit reports. Kaur and Singh used a call center in India whose employees would call customers using aliases such as “Neil McKenzie” or “Anthony Jones.”
  
  
• The indictment alleges that after luring customers into using these purported services, Kaur, Singh, and their agents instructed customers to send in monthly payments of $500 or more. Even though they collected regular payments from customers, the defendants did not contact creditors on behalf of customers. Nor were customers informed that the defendants were not in fact providing the promised debt renegotiation services.
  
  
• To mislead customers as to the status of their debts, the defendants sent fake letters from creditors indicating that the customers’ loan modifications had been approved. When customers would contact the defendants’ companies about late-payment or default notices they had received from their creditors, the defendants and their agents would either hang up on customers or request that customers continue to make service payments to the defendants.
  
  
• Customers sent over $400,000 in payments to the defendants. According to the indictment, Kaur and Singh used the funds received from customers for their own benefit. Kaur and Singh also wired a portion of the funds to an individual in Kolkata, India.

For the U.S. Attorney press release, see Two Fresno Business Owners Indicted For Defrauding Hundreds Of Homeowners And Other Customers Seeking Debt Relief And Credit Repair.

Real State Operator Accused Of Using Phony Mortgage Assignments In $1M+ Distressed Loan Investment Ripoff; Prosecution Limited By Expiring Statute

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:

• A Cooper City man is being accused of defrauding a West Boynton investor of more than $1,000,000 in a distressed mortgage sham, according to a Broward Sheriff's Office report. Richard Brett Meyer, 53, was charged with grand theft over $100,000 and sale of security; he was released on $11,000 bond [].
  
  
• The investor, Allen Pinkwasser, reported to the Sheriff's Office that, starting several years ago, he entered into an agreement with Meyers to purchase foreclosed mortgages that promised an 18 percent return. Meyers was to purchase the mortgages using his company, Rockland Trust, Inc.
  
  
• Pinkwasser provided funds for 24 properties, but subsequently got nothing in return, according to the report. Due to the statute of limitations, only seven of Pinkwasser's payments can be considered for prosecution. Properties were located in Coral Springs, Deerfield Beach, Wilton Manors, Hollywood and West Palm Beach.
  
  
• According to the arrest report, Meyers would present Pinkwasser with an attorney's title fund insurance policy and a fictitious assignment of mortgage.

Source: Cooper City man charged in mortgage fraud case.

Dozens Of Bronx Tenants Get Temporary Boot On 2 Days Notice, Then Get Stiffed On 'Alternate-Digs' Hotel Cash After Fire Escape Removal Rehab Screw-Up

In The Bronx, New York, the New York Post reports:

• They’re getting screwed again. Displaced Bronx residents whose fire escapes were mistakenly removed by construction workers say they’re receiving a paltry sum for alternate accommodations. “The money that they’re giving is for hotels for people living in the streets,” said Yadia Molina, 32, of the $120 per night she is being offered by the University Heights building’s owner, Goldfarb Properties.
  
  
• “I am paying a lot of rent here because I wanted my daughter to be in a safe place,” said Iliana Pena, 31, who has three daughters, one with severe asthma. “Now all of a sudden I have to pack and go to a motel where it smells like smoke and dust. It’s frustrating.”
  
  
• The project’s engineer, Roland Draper, didn’t file the proper paperwork with the Department of Buildings, a DOB spokesman said. DOB is investigating Draper’s incorrect application, as well as the other 48 active projects where he’s involved. Draper did not return a call for comment. His state license was suspended for one month in 2005 after he was convicted of restraint of trade, records show.
  
  
• On Monday, the nearly 200 residents of 2400 Webb Ave. were given 48 hours to find temporary digs after Colgate Restoration Corp. of Brooklyn, doing facade repairs, foolishly removed all fire escapes.
  
  
• Some of the hotels available for $120 like the Concourse Hotel at $65 a bed a night are home to bedbugs, rats and malfunctioning toilets, according to online reviews.

Source: New hell for no-fire-escape Bx. families.

Congressional Efforts To Bleed Non-Profit Law Firms Dry Continues, Leaving Poor With No Legal Help In Civil Matters

An excerpt from a column in Remapping Debate:

• While the right of an indigent defendant to have counsel appointed for criminal cases is constitutionally-protected, there is no such right for lower-income people who need to bring or defend civil cases, leaving them with limited access to the justice system.
  
  
• Congress, however, created the Legal Services Corporation (LSC) in 1974 with the intention of providing high quality civil legal aid to poor and working class Americans — those in households at or below 125 percent of the poverty level (currently $27,938 for a family of four). And independent observers, including bar associations, sheriffs’ offices, and State Supreme Court justices, widely acknowledge that LSC-funded lawyers perform vital work for their clients.

***

• Despite its achievements, conservatives have consistently targeted the LSC, attempting to strip it of resources, and, at times, to abolish it. This pressure began in earnest in 1981, just months after Ronald Reagan assumed the presidency. Until that year, the LSC’s budget had grown consistently. Reagan was unsuccessful in his attempt to shutter the LSC entirely, but he succeeded in cutting its budget by 25 percent. In the following decade, under House Speaker Newt Gingrich, Congress hit the program with even greater constraints. The LSC has been hamstrung by major budget cuts and service restrictions under both Democratic and Republican presidents ever since.
  
  
• The push against the LSC continues. Just last month, Rep. Austin Scott (R-Ga.) proposed an amendment to the fiscal year 2013 House Appropriations Bill that would have ended all funding for the LSC. (The amendment failed, but garnered 122 votes.)

For more, see The relentless push to bleed Legal Services dry.

Contractor To Stop Operating, Reimburse $160K To Settle Charges Of Pocketing Upfront Cash, Failing To Provide Full Services, Stiffing Subs & Suppliers

In Des Moines, Iowa, the Des Moines Register reports:

• A West Des Moines business has been barred from future residential contracting and ordered to reimburse dozens of customers more than $160,000 after they complained that the owners failed to provide labor, materials and other services.
  
  
• Iowa Attorney Tom Miller filed a lawsuit against IQ Renovation LLC and its owners Megan Troyer Marlow and Timothy Marlow, claiming they violated Iowa consumer fraud and door-to-door sales laws, Miller’s office said in a statement. Timothy Marlow also offered services under Energy Savers, the state said.
  
  
• Miller’s lawsuit, resolved with a consent judgment, outlines several complaints, including that the company accepted advance payments without completing or even starting construction projects, and accepted payments from customers without paying subcontractors and suppliers, the state said.

For the story, see West Des Moines contractor ordered to pay customers $160,000, barred from providing future building.

BofA, Fannie Give Homeowner In Process Of Moving From Foreclosed Home Abrupt Boot Anyway, Grabbing His Possessions & Sticking Them In Storage

In Boston, Massachusetts, the Jamaica Plain Gazette reports:

• Ken Tilton was forcibly evicted from his Weld Avenue home on June 1 despite the fact he already was in the process of moving out. Tilton—the former owner of landmark JP businesses Zon’s restaurant and the novelty store Pluto—has been working with the local housing group City Life/Vida Urbana since Bank of America and Fannie Mae foreclosed on his house in 2009.
  
  
• The eviction was not expected, as Tilton was already planning on moving to a new home, he said. Most of his belongings were already in boxes when the truck showed up and he planned to move the bulk of them to his new home the following day, June 2.
  
  
• Fannie Mae, the owner of the loan, “didn’t give me a day. They didn’t give me an hour,” he told the Gazette as movers loaded the truck. City Life attorneys contacted the Federal National Mortgage Association, commonly known as Fannie Mae, to ask for a day’s delay but were denied, City Life Organizing Coordinator Steve Meachem told the Gazette. A Gazette email to Fannie Mae was not answered by press time.
  
  
• Tilton’s belongings were taken by a court-ordered moving company to Extra Space Storage on Washington Street, a few minutes from Tilton’s house at 11 Weld Ave. He was not allowed to take the belongings to his new apartment.

For the story, see Lender evicts man during move-out.

Foreclosed Homeowner's Refusal To Leave Home Leads To Tear Gas, Gunfire Exchange With Cops

In St. Ann, Missouri, KMOX Radio 1120 AM reports:

• St. Ann Police say they had to shoot a man who shot at them during a foreclosure eviction. St. Ann Police Chief Bob Schrader has known the man for years. The chief says the 51-year-old man was upset about losing his home to foreclosure.
  
  
• “He was just so stubborn about it and I told him what his options were and what was going to happen , he said I dont care I’m not coming out.” Chief Schrader told KMOX.
  
  
• Schrader says after police fired tear gas into the house. The man fired shots out a window, out the back door as officers tried to get in..he then went back to the front. “He pointed the guns at me and my men and another officer saw it and took the shot” said Chief Schrader. The man was hit in an arm causing him to drop the gun and fall to the ground.
  
  
• Schrader says the man’s mother had recently died and he’d been involved in a dispute with family members about the house. The man was being treated at a hospital.

Source: St. Ann Police Shoot Man Upset about Foreclosure.

Rent Scams Promoted On Craigslist Creating Headaches For Home Sellers, Real Estate Agents

In Northwest Indiana, the The Times of Northwest Indiana reports:

• A nationwide Craigslist rental scam has targeted some Northwest Indiana homeowners. A Lowell homeowner, whose house is listed for sale, reported to police June 1 that a neighbor saw the property fraudulently advertised for rent on Craigslist. The fraud perpetrator is enticing potential renters to send or wire deposit money.
  
  
• The property owner’s real estate co-agent, Trinity McCormick, of Re/Max Integrity Group, said an unauthorized person copied the photos and information from the Greater Northwest Indiana Realtors Association multiple listing service website and then advertised it as a rental.
  
  
• McCormick said this is not the first time she has encountered rental fraud. She said a three-bedroom Cedar Lake home, listed as renting for $1,175 per month was copied and advertised for $700 per month. McCormick said Craigslist immediately removed the false ads when notified.
  
  
• GNIAR has been sending notices to its members warning of the scam. One Valparaiso home, priced for sale at $1.1 million, was fraudulently listed on Craigslist for rent at $800 per month including utilities. The seller was surprised by a “potential renter” who showed up at the home unannounced.
  
  
• During the past two weeks, a client of Realtor Mitch Harris, of Coldwell Banker in Valparaiso, has "potential renters" showing up at her Portage Township home even talking to her children.
  
  
• Harris has been inundated with calls from people seeing the fake ad listing the rent at $800 less per month than the actual amount. They call after driving by and seeing his name on the sign. Harris said the perpetrators claim to be the homeowners who are out of town and say they are firing their Realtor for doing a bad job. They ask to have deposit money wired and promise to mail the keys.
  
  
• Harris had a similar problem with a Lakes of the Four Seasons last year. He said people were actually showing up and looking in the windows.

For more, see National rental scam reaches NWI.

Law Firm/Bill Collector Fails To Track Payments Received, Refuses To Provide Account Statement, Decides To Sell Debt When Balance Nearly Fully Paid

In Elizabeth, New Jersey, The Star Ledger reports:

• There was a judgment against [Jacqueline Halsey] for nonpayment of the credit card. The debt totaled $1,286.55, including interest and court fees. When Halsey called [debt collector/law firm Eichenbaum & Stylianou] to get more information, a rep asked if she wanted to pay off the debt, Halsey said.
  
  
• “I said no, that I didn’t have (the money) at this time. I asked if I could do a payment arrangement of $100 per month but I was told it would have to be more,” said Halsey, 54. “I was told they would have to take steps to get this paid off. I told them to do what they have to do since my amount was not acceptable.”
  
  
• And it did. A lien was placed against Halsey’s bank account in January 2012. In the meantime, Halsey had started sending monthly $100 money order payments to the court. That apparently wasn’t enough. In March, Halsey’s paycheck was garnished $169.03, an amount that would be taken out every two weeks until the debt was satisfied.
  
  
• But the recording of the debt was confusing. On each pay stub, it would indicate the amount being garnished and the remaining balance of the debt. But it didn’t add up, she said. The monthly $100 Halsey had started paying to the court was not reflected in the remaining balance.
  
  
• Halsey said she called Eichenbaum & Stylianou several times in March, asking for an explanation. Halsey said she explained to a rep that the math was wrong when you added together the garnishments and the $100 monthly payments.
  
  
• But it didn’t help. Halsey said the rep told her it had no record of the garnishments or of the money orders Halsey paid to the court, nor was an account statement offered. "(The rep) asked again if I wanted to pay off the balance,” she said. “I told her that her company was already being paid twice and that all I wanted at this point was a statement from Eichenbaum & Stylianou showing payments made and the balance due.” Halsey said she also reached out to the court, which told her to talk to Eichenbaum.
  
  
• The weeks went by and the garnishments continued, but the balance shown on Halsey’s pay stubs remained incorrect. By the beginning of May, it was obvious to Halsey that the court and Eichenbaum still weren’t in sync. Halsey had paid $400 via money orders and $845 through garnishment for a total of $1,245, just $41 less than the total amount owed.
  
  
• But her pay stub showed she still owed $457. “I’m happy to pay it, but I don’t want to overpay,” she said. “I just don’t think it’s fair, and I bet I’m not the only one.”
  
  
• We reviewed the court documents, pay stubs and letters Halsey received from the court and from Eichenbaum. Then we called the debt collector.
  
  
• We reached the rep Halsey talked to, and the rep said the company couldn’t discuss the debt because it’s being sold to a different company. It would be transferred sometime in the next few weeks, the rep said.
  
  
• We asked if a current account statement could be accessed so Halsey could compare what she’s paid and what the firm has received. Nope. The rep said Halsey’s file couldn’t be accessed was because the debt is moving to another company. Has it moved yet? No.
  
  
• So it would seem this company is collecting money on a debt but its employees can’t see how much it has collected to date.

For more, see Bamboozled: Debt collector wasn't keeping track of payments and, surprisingly, state law doesn't require it.

Adult Daughter Files Suit To Recover 50% Interest In Deceased Dad's Home Improperly Conveyed By His Surviving Former Wife To Step-Brother

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

• The only daughter of a deceased Beaumont man claims his former wife has wrongly conveyed her father's property to her son. Amy Murdock claims her dad, Gary W. Johns, owned a home on Fairfield Lane in Beaumont. Upon Gary Johns's death, he left Murdock a 50 percent undivided interest in the property and Shirley E. Johns the remaining interest in the property, according to the complaint filed May 15 in Jefferson County District Court.
  
  
• Even though she owns only 50 percent of the property, Shirley Johns deeded 100 percent of the property to her son, defendant Jack Parham, the suit states.
  
  
• "Despite several letters being sent to defendants in addition to phone conversations with defendants, defendants have failed and refused and continue to fail and refuse to rescind the deed and correct the transfer of ownership percentage," the complaint says.
  
  
• Since then, Shirley Johns has moved to a nursing home and is no longer living at the property, Murdock claims. In her complaint, Murdock is seeking a declaratory judgment that Shirley Johns's deed to her son be rescinded and that he be given only a 50 percent undivided interest in the property. She also seeks a declaration that the property be sold, plus an award of costs, attorney's fees and other relief the court deems just.
  

Source: Woman in dispute with step-brother over father's property.

Recent Federal Case Creates Uncertainty In Arkansas Foreclosures

In Jonesboro, Arkansas, The City Wire reports:

• A May 11 ruling from U.S. District Court Judge J. Leon Holmes is expected to unplug a bottleneck of foreclosure filings that began in the fall of 2011 when a bankruptcy court ruling essentially halted the sale of foreclosed homes.
  
  
• In a Sept. 29 decision involving a Chapter 13 bankruptcy case in the Eastern District of Arkansas, Jonesboro Division, the court held that a lender not authorized to do business in the state of Arkansas was not in compliance with the state’s non-judicial foreclosure laws.
  
  
• That case, In Re Johnson, concerned objections filed by J.P. Morgan Chase Bank and the related Chase Home Finance regarding the confirmation of three Chapter 13 plans for debtors who had lost their homes to the lenders through non-judicial foreclosure proceedings.
  
  
• Arkansas’ Statutory Foreclosure Act was first approved in 1987. In 2003, the Arkansas Legislature added the following language: “No person, firm, company, association, fiduciary, or partnership, either domestic or foreign, shall avail themselves of the procedures under this chapter unless authorized to do business in this state.”

***

• Judge Holmes rejected the notion that JPMorgan was out of compliance simply because it was not an Arkansas-based company. “A national bank chartered by the Office of the Comptroller of the Currency is authorized to do business within Arkansas, which is all that is required by Ark. Code Ann.18-50-117. Therefore, as a national banking association, JPMorgan Chase Bank, N.A., was authorized to avail itself of the Arkansas Statutory Foreclosure Act,” Holmes noted in his ruling.
  
  
• He also said Arkansas law was never written to imply exclusion. “Had the General Assembly intended to require that an entity obtain a certificate of authority from the Arkansas Secretary of State, the Arkansas Bank Commissioner, or some other state office, as a prerequisite to performing nonjudicial foreclosures, the Statutory Foreclosure Act would have said so,” Holmes ruled.(1)

For the story, see Holmes’ ruling to open foreclosure bottleneck.

For Judge Holmes' ruling, see JP Morgan Chase Bank, N.A. v. Johnson, No. 3:11CV00249 JLH (E.D. Ark. (May 11, 2012).

Thanks to Deontos for the heads-up on the story.

(1) Except for the actual litigants involved, unless and until this or a similar Arkansas case is referred out of the federal court system and to the Arkansas Supreme Court for a final adjudication, the legal issues involved in this case will never ultimately be resolved in Arkansas (and, contrary to The City Wire's headline, the foreclosure bottleneck will not be opened - unless, of course, the title insurance underwriters decide to proceed recklessly, anyway).

Under federal law, based on the so-called Erie Doctrine (see Erie Railroad Co. v. Tompkins, 304 U.S. 64, 82 L. Ed. 1188, 58 S. Ct. 817 (1938), and the 'handful' of cases thereunder), federal court rulings implicating issues of state substantive (as opposed to procedural) law do not necessarily constitute binding precedent on state or federal courts in subsequent similar cases. The final authority on issues of substantive state law, as the U.S. Supreme Court has reminded us a numerous occasions, is the highest court of the state, regardless of whether the federal court's jurisdiction in a particular case is based on diversity jurisdiction, or not (as is the case here).

• "This is not a diversity case but the same principle may be applied for the same reasons, viz., the underlying substantive rule involved is based on state law and the State's highest court is the best authority on its own law." Commissioner v. Estate of Bosch, 387 U.S. 456 (1967).

Indiana AG Continues With More Civil Suits Targeting Alleged Out-Of-State Loan Modification Rackets

From the Office of the Indiana Attorney General:

• Indiana Attorney General Greg Zoeller filed five lawsuits on issues ranging from illegal foreclosure consultants to violations by local car dealerships [] in Lake County.

***

• Foreclosure consultants First Financial Link, LLC and Josegan, Inc. both of Florida are accused of ripping off two Lake County victims for a total of $3,500.
  
  
• According to the lawsuits, both businesses promised to reduce homeowners’ interest rates or monthly payments in exchange for an upfront fee. Consumers made payments ranging from $1,500 to $2,000 before realizing little or no progress had been made on their home loans.
  
  
• The complaints allege the defendants violated the Credit Services Organization Act, the Mortgage Rescue Protection Fraud Act, the Home Loan Practices Act and Deceptive Consumer Sales Act (DCSA).
  
  
• The companies did not register a $25,000 surety bond with the Attorney General’s Office to conduct business as foreclosure consultants in Indiana. The state seeks an injunction, restitution and civil penalties.

For the Indiana AG press release, see AG Zoeller stands up for local victims, files wave of lawsuits.

Iowa Couple's Legitimate Move To Score 'Free House' Through Homestead Exemption Claim May Be Sunk After Feds Bring Charges For Alleged Mortgage Fraud

In Des Moines, Iowa, the Des Moines Register reports:

• An Ankeny couple were engaged in bank fraud when they exploited an 1888 loophole in mortgage law to obtain a free house, part of a scheme that also involved a Des Moines police officer and his wife, according to a 26-page federal indictment unsealed Friday afternoon.
  
  
• The 13-count indictment alleges that Jamie Bowers-Danielson, her husband Matthew Danielson, Bobbi Jo Wojewoda, and her husband, Des Moines police Lt. Wade Wojewoda, were part of a nearly four-year conspiracy of lying to banks and falsifying documents to get loans approved.

***

• The Danielsons gained public attention last year when they used a century-old banking technicality to escape payments on a $278,000 home [...] in Ankeny. The couple persuaded Iowa appellate courts to void a foreclosure proceeding based on the fact that Iowa law requires both spouses to sign a mortgage.

For more, including the 26-page federal indictment, see Updated: Mortgage fraud indictment includes DMPD officer, couple who received a free home last year.

For the Iowa appeals court ruling that allowed the homeowners to score a 'free house' in the first place, see Citimortgage, Inc. v. Danielson, 771 N.W.2d 653, 2009 Iowa App. LEXIS 1071 (Iowa Ct. App., 2009)

Go here for earlier posts on this story.

Pair Face Multiple Felony Theft Charges In Alleged $76K Ripoff Targeting Wanna-Be Homebuyers With Offers To Sell Homes Recently Lost In Foreclosure

In Bryan, Texas, The Bryan-College Station Eagle reports:

• A Bryan woman awaiting trial on multiple felony charges was arrested again Friday, accused of trying to bilk $76,050 from three couples who thought they were buying homes and later learned none were hers to sell.
  
  
• Rose Rodriguez [...] was charged with four felony theft counts after an investigation by the Brazos County District Attorney’s Office. Her 50-year-old husband — Carlos Rodriguez — was charged with one related count of felony theft.
  
  
• All three of the homes actually had been foreclosed upon: One had belonged to the Rodriguez couple, another to the husband’s relatives and the third to Rose Rodriguez’s mother. In all three schemes, the Rodriguez’s kept delaying in handing over keys to the homes, prompting each to investigate the situation themselves before heading to the police department, documents state.

***

• Rose Rodriguez was charged with two counts and her husband with one count of theft between $20,000 and $100,000 — a third-degree felony punishable by two to 10 years in prison and a $10,000 fine. She also is accused of two counts of theft between $1,500 and $20,000— a state-jail felony punishable by up to two years in prison and a $10,000 fine.

For more, see Former Rose Home owner charged in scheme.

Another Homeowner Falls Victim To Illegal Foreclosure Lockout; Chase, LPS Yet To Explain Why They Chaged Locks On Wrong Premises

In St. Augustine, Florida, First Coast News reports:

• John Delaney of St. Augustine is bewildered, wondering why a mortgage company not his own changed the locks on his home without his knowledge. John Delaney drove in from Chicago Wednesday night and went to open the door of his second home condo in St. Augustine. The key didn't work. He got in through the back screen door, which fortunately in this case he had forgotten to lock.
  
  
• "I discover there is this sticker here saying that the locks were changed at the request of my mortgage company, I couldn't figure out why, I am current on my mortgage."
  
  
• Delaney spent 5 hours on the phone with LPS Field Services which changed the locks at the request of Chase Financial. But Chase is not his mortgage company. "I was a little uncomfortable that people have been in my house. I don't know what is going on. Everything is clean so I don't know if people have been using this house for something or what."
  
  
• LPS Field Services did have the locks changed again the next day. "But I got no explanation from Chase or LPS other than it was a mistake. I'd like to have someone from Chase give me an explanation of why this happened or how it could happen because they could do it to anybody."
  
  
• First Coast News contacted Chase and LPS and we are still waiting for an explanation as to why it happened. Michelle Kersch of LPS did send us an email saying, " We pledge to get to the bottom of this matter as soon as possible- and understand just how important it is." FCN reached Chase Financial but have not heard back from them. Delaney did file a police report with the St. Johns County Sheriff's Office.
  
  
• Local real estate attorney Daniel Copeland says he's not seen any similar cases. He believes Delaney will find out in his case, the companies involved just went to the wrong condo.

Source: Man locked out of his house by mortgage company.

Serial Squatter Turns Down $4K Cash For Keys Offer, Then Gets Pinched With 11 Felony Charges In Adverse Possession Vacant Home-Hijacking Racket

In Detroit, Michigan, The Detroit News reports:

• Nine years ago, the six-bedroom, brick and stone Tudor Revival in the city's Palmer Woods neighborhood sold for almost $480,000. So neighbors got suspicious when its new occupant pulled up in a U-Haul last fall and used garbage bags to block the windows of the 4,400-square-foot house.
  
  
• Thus began an elaborate cat-and-mouse game between some of the city's most elite residents — including judges and lawyers — and a man prosecutors allege is a serial squatter. For eight months, residents badgered a bank that owned the foreclosed home, persuaded utilities to shut off power, blocked the driveway with large rocks and put glue in the front door lock to keep the squatter out.
  
  
• "The judges were calling here trying to see what we could do," said Anthony Cartwright, a broker whose firm, North American Real Estate, markets the home for Fannie Mae. "I said, 'You're a judge.'"
  
  
• Residents won last week when prosecutors charged Clarence Boykin Jr., 53, with 11 felonies accusing him of filing false ownership paperwork on three houses, including two in Palmer Woods. A not-guilty plea was entered on his behalf Tuesday at Wayne County Circuit Court and he remains jailed.
  
  
• Experts say the battle demonstrates the severity of the squatting problem in foreclosure-ravaged Detroit and the lengths homeowners must go to oust illegal occupants. [...] Even Detroit's finest neighborhoods aren't immune, and the odds are stacked against neighbors.
  
  
• Fannie Mae couldn't evict Boykin from the six-bedroom house because the foreclosure was recent. By law, owners have six months to reclaim foreclosed property. And Boykin filed paperwork claiming it was his, Cartwright said.
  
  
• Cartwright's firm even offered the squatter $4,000 to leave for "relocation assistance." He refused. "He (Boykin) said he was going to court to get the property," Cartwright said. "There's always a loophole, which he followed."

For more, see Neighbors find Detroit squatter tough to dislodge.

Mrtg. Fraud 'Small Fries' The Preferred 'Low-Hanging Fruit' For Cherry-Picking Prosecutors; White Shoe Lawyer-Defended Banksters Continue On Free Ride

An excerpt from a recent commentary by David Dayen on Firedoglake:

• Joe Nocera returns to the story of Charlie Engle today. Engle is a marathoner who participated in a liar loan during the housing bubble. The IRS – really one vindictive agent of the IRS – tracked him down, searched through his garbage, sent an undercover agent with a wire to get him to admit guilt, and coming up empty on any tax violations, prosecuted him for the liar loans.
  
  
• It turned out that the mortgage broker inflated his income on the loan document after the fact. But Charlie Engle, not the broker, was prosecuted, and sent to jail. He gets out this week, still burdened with a felony record and five years of probation.
  
  
• Nocera makes a very provocative but accurate point about how the Justice Department has conducted itself during the aftermath of the financial crisis. It’s not just about avoiding any prosecutions for the top Wall Street executives whose fraud led to the crisis; it’s about making up for that through prosecutions of the bit players [...]

***

• Just this week, Abacus Federal Savings Bank, a tiny bank catering to the Chinese community in New York City, was charged with mortgage fraud, with 19 of its former employees put under arrest.
  
  
• The suit charges Abacus with selling loans to Fannie Mae with false information. However, “nearly all of the Abacus loans were still performing,” according to the indictment. This contrasts with the millions of loans that went bad when big banks engaged in the same exact scheme, selling securities based on loans without revealing their underlying status.
  
  
• Also this week, the SEC admitted that they would rather go after smaller firms for paperwork violations than the JPMorgan Chases or Bank of Americas of the world for the systemic violations of securities laws.

For more, see Federal Regulators Cherry-Pick Small Fry for Prosecutions.

See also:

• The New York Times: The Mortgage Fraud Fraud;
• The New York Times: Abacus Bank Charged With Mortgage Fraud;
• Rolling Stone: SEC: Taking on Big Firms is 'Tempting,' But We Prefer Picking on Little Guys.

Supreme Court OKs 'Un-Split' Bogus Loan Fees Under RESPA; Opens Door For Expected Fee-Clipping Barrage Of Real Estate Closing 'Junk' Charges

Real estate columnist Kenneth Harney writes (appearing in The Washington Post):

• In a decision that could have significant effects on the fees that consumers pay in real estate transactions, the U.S. Supreme Court has ruled that “unearned” fees charged by lenders and other service providers do not violate federal law as long as they are not split with anyone else.
  
  
• The court’s unanimous decision effectively reopens the door to controversial “administrative” fees levied by real estate brokers, and could encourage the marking-up of fees by mortgage lenders, settlement agents and others, a practice that had been banned by federal regulators for the past decade.
  
  
• The ruling also represents a stinging defeat for the Obama administration’s departments of Justice and Housing and Urban Development — both of which had argued that charging unearned fees is illegal — and may be a shot across the bow of the new Consumer Financial Protection Bureau, which has inherited the task of policing mortgage and settlement abuses from HUD.
  
  
• The decision, handed down May 24, involved customers of Quicken Loans, the online mortgage company, who alleged that Quicken charged them “discount” fees but did not provide them lower interest rates on their mortgages, as is customary.
  
  
• Each “point” in a loan discount fee is equal to 1 percent of the mortgage amount. The failure to provide a lower rate, the plaintiffs claimed, meant that Quicken pocketed their fees without providing anything commensurate in return, which is a violation of the federal Real Estate Settlement Procedures Act (RESPA).

For more, see High court says ‘unearned’ fees charged by lenders and other service providers do not violate U.S. law.

See also:

• The Associated Press: Court: Families cannot sue over loan discount fee;
• Public Citizen Consumer Law & Policy Blog: Supreme Court Unanimously Rejects Suit Over Bogus Loan Discount Fees.

For the U.S. Supreme Court ruling, see Freeman v. Quicken Loans, No. 10-1042 (May 24, 2012).

Fourteen Cop Pleas In Conspiracy To Wrestle Control Of Nearly A Dozen HOAs; Racket Sought Influence To Land Lucrative Contracts From Associations

In Las Vegas, Nevada, the Las Vegas Review Journal reports:

• Fourteen more defendants pleaded guilty Thursday in the sweeping investigation into fraud and corruption at Las Vegas Valley homeowners associations. It was one of the largest group plea deals ever engineered in Nevada by federal prosecutors. Yet the prosecutors made it clear in court they're not yet done.
  
  
• Halfway into the group plea of the 14 defendants, Charles La Bella, a deputy chief of the Justice Department's Washington-based Fraud Section, told U.S. District Judge James Mahan that he planned to continue presenting evidence this summer to a federal grand jury. The goal is to obtain indictments against still more defendants, La Bella said.
  
  
• Prosecutors are looking to charge as many as a dozen more co-conspirators in the scheme to take control of nearly a dozen homeowners associations between 2003 and 2009.
  
  
• More than $8 million was funneled through secret bank accounts to fund the scheme, which allowed the conspirators to land lucrative legal, construction and community management contracts at the associations, prosecutors revealed in court documents Thursday.

For more, see Fourteen more plead guilty in HOA fraud, corruption case.

For the U.S. Justice Department press release, see Fourteen Defendants Plead Guilty for Their Roles in Scheme to Fraudulently Control Home Owners Associations in Las Vegas.

Michigan High Court To Decide Impact Of Failure To Record Mortgage On Subsequent Foreclosure Sale

In Lansing, Michigan, Legal Newsline reports:

• The Michigan Supreme Court, in an order last month, said it will hear an appeal by one of the nation's largest mortgage servicers in a case over a state foreclosure law.
  
  
• In January, the state Court of Appeals ruled unanimously in favor of plaintiffs Euihyung Kim and In Sook Kim. The husband and wife sued JPMorgan Chase Bank N.A. in November 2009 seeking, among other relief, to set aside a sheriff's sale of their home. When the plaintiffs defaulted on a $615,000 loan from Washington Mutual Bank to refinance their home, JPMorgan Chase sought to foreclose by advertisement. In June 2009, the mortgage servicer purchased the property at a sheriff's sale for $218,000.
  
  
• The appeals court ruled that JPMorgan Chase was not authorized to proceed with the sale under Michigan's foreclosure by advertisement statute. The defendant, it said, failed to record its mortgage interest before the sale as required by the law. Soon after the court's ruling, in February, JPMorgan Chase sought review by the state's high court.
  
  
• In a one-page order filed May 9, the Court granted JPMorgan Chase's application. The appeal will be limited to the issues of whether the defendant acquired the couple's loan by operation of law and, if so, whether the foreclosure by advertisement statute applies to the acquisition of a mortgage by operation of law, the Court wrote.
  
  
• Also, the Court said it would review if the foreclosure procedures in the case were "flawed," and whether the foreclosure, itself, is voidable [Editor's Note: or, according to the one page order, void ab initio]. In its order, the Court invited the Michigan Association of Bankers, the Real Property Law Section of the State Bar of Michigan, and the Consumer Law Section of the State Bar of Michigan to file amicus briefs.

Source: Mich. SC to review foreclosure case against JPMorgan Chase.

Homeowner Lawsuits Challenging Foreclosures Skyrocket In New Hampshire With Many Finding Their Way Into Federal Court

The New Hampshire Business Review reports:

• A Swanzey woman claims a mortgage originator deliberately lied about her income in order to push through a refinancing, and then the bank pressured her husband -- suffering from dementia -- to sign on to the mortgage to make it easier to foreclose on the property.
  
  
• A Wolfeboro borrower claims that he wanted to pay off the note in full, but couldn't get a straight accounting from the bank. Indeed, the bank even cited the wrong date, book and page number and parties when recording the mortgage assignment.
  
  
• Another borrower claims he was told by a bank to stop paying the mortgage on his Jackson home in order to qualify for a modification program, and then he was given the runaround when he tried to get on the program, and then the bank filed for foreclosure, telling him it was too late to be eligible.
  
  
• Whether any of these claims is true is up to courts to decide. But these are the kinds of complaints against major banks being made in the state, and now federal, courts as a small but growing number of homeowners begin to challenge foreclosures.
  
  
• In 2011, about 210 homeowners -- or 5.5 percent of the 3,863 foreclosure deeds filed in New Hampshire that year -- sued their mortgage company, almost triple the 75 (2.1 percent) that filed suit in 2008. This year, if the pace keeps up, about 240 will be filed.
  
  
• "Banks' actions are egregious, and more and more people are doing something about it," said Jeremey A. Miller, a Concord attorney who specializes in defending homeowners from foreclosure.

***

• Nearly all of the mortgage companies, based out of state, have the right to move these cases to federal courts, and are increasingly doing so because they say the federal court bureaucracy moves much quicker. "I'm sure it does," said Don Goodnow, the director of the New Hampshire Administrative Office of the Courts, which works with the state's courts. "It is better funded."
  
  
• But Concord attorney Miller sees the move to federal courts as an attempt by mortgage companies to intimidate homeowners by moving their suit "to a big granite building in Concord."

For more, see N.H. state and federal courts see a big increase in the number of suits challenging foreclosures.

Head U.S. Civil Rights Fed: Blacks, Latinos Likely "Paid What Amounted To A Racial Surtax" On A SunTrust Home Loan

The Associated Press reports:

• SunTrust Mortgage Inc. agreed Thursday to pay $21 million to settle a federal lawsuit alleging racial discrimination in its lending practices, the second-largest fair lending settlement ever obtained by the U.S. Department of Justice.
  
  
• A complaint filed by the department in U.S. District Court in Richmond said SunTrust Mortgage charged more than 20,000 black and Hispanic borrowers more than similarly qualified non-Hispanic white borrowers between 2005 and 2009. Minority borrowers in 75 geographic markets stretching from Virginia Beach to San Francisco paid more in loan fees or higher interest rates based solely on race or national origin, according to the complaint.

***

• Thomas E. Perez, assistant attorney general for the Civil Rights Division, said the agreement is second only to last year's record $335 million fair-lending settlement with Countrywide.
  
  
• "At the core of the complaint is a simple story: If you were African-American or Latino, you likely paid more for a SunTrust loan than a similarly qualified white borrower simply because of your skin color," Perez said in a teleconference with reporters. "You paid what amounted to a racial surtax that ranged from hundreds to thousands of dollars."

For more, see SunTrust Mortgage settles fed complaint for $21M.

For the U.S. Justice Department press release, see Justice Department Reaches $21 Million Settlement to Resolve Allegations of Lending Discrimination by Suntrust Mortgage (Borrowers Were Charged Higher Fees Based on Their Race or National Origin in 2005-2009 Before the Company Implemented New Policies).

Chinatown Bank Allegedly 'Unloaded' Profitable Loans Onto Fannie, Gets Pinched Anyway By Shameless DA In Mortgage Fraud Probe

In New York City, the New York Post reports:

• A small Chinatown-based bank that caters to poor immigrants has been busted in a massive mortgage-fraud scheme for allegedly securing hundreds of millions of dollars in loans for unqualified borrowers.
  
  
• Abacus Federal Savings Bank raked in millions of dollars in fees while systemically falsifying thousands of loans that it knew were over-the-top risky, authorities said [].
  
  
• “If we’ve learned anything” from the 2008 mortgage collapse, “it’s that at some point, these schemes unravel and taxpayers are left holding the bag,” Manhattan District Attorney Cyrus Vance Jr. said at a press conference announcing the arrests of 19 former bank workers as part of a 184-count indictment. Those charged include the bank’s chief credit officer, Yiu Wah Wong, 61, of Flushing, Queens, the most senior loan-department manager.
  
  
• The mortgages were granted on the basis of the bankers’ misrepresentations of the incomes and worth of the borrowers, who tended to work in cash-only businesses, Vance said. Based on these paperwork lies, a package of more than 4,000 shaky mortgages was then resold to the Federal National Mortgage Association, commonly known as “Fannie Mae” — the primary victim of the scam along with taxpayers themselves, should the borrowers default, Vance said.
  
  
• The vast majority of the borrowers are current on their payments, but the risk of future default is still high, officials said. The bank — which has branches in Chinatown, Flushing and Downtown Brooklyn — is in no danger of collapsing, prosecutors added. Of the 19 accused bankers, eight have pleaded guilty and the remaining 11 have been indicted by a grand jury, prosecutors said.

***

• Abacus officials released a statement saying they were “greatly disappointed” by the indictment given the bank’s role in uncovering and investigating at least some of the alleged misconduct. “There is no evidence that any senior executive at the bank engaged in illegal behavior,” the statement said. “Neither Fannie Mae nor the borrowers were ever harmed.
  
  
• “The bank feels that a grave injustice has occurred and that the DA’s office is overreaching in trying to make a case against the bank,” Abacus officials added.
  
  
• “We do not understand why our community bank — which is the only victim in this case — would be targeted for prosecution when many other banks that contributed to the national economic crisis remain untouched.”
  
  
• Abacus spokesman James Haggerty told The Post, “The bank has among the lowest default rates in the country — less than 0.50 percent, compared to the national average of more than 5 percent. And Fannie Mae made more than $100 million on these loans.’’ The DA’s office was assisted in its investigation by the Federal Housing Finance Agency and the Internal Revenue Service.

Source: Chinatown bankers ‘cook’ loan books.