Southern California Squatters Continue Making Themselves At Home In Vacant Unguarded Foreclosed Homes As Banksters Fiddle

In Southern California, KCET-TV reports:

• This is a foreclosure story that will make you hit the roof. It all started when California's real estate bubble popped. Then foreclosures spiked, and then came the squatters.
  
  Squatters are taking advantage of all those empty, unguarded homes owned by the banks and not being maintained. Turns out at least one trespasser may have done a lot more than just make himself at home.

For more, see Squatter's Rights and Wrongs: Some Making Money Off Foreclosed Homes.

Judge Delays Sentencing For Sobbing Scammer Until Alleged Co-Scamming Dad Stands Trial In Case Involving Failed Promises Of Foreclosure Assistance That Screwed 100+ Homeowners

In Hartford, Connecticut, NBC Connecticut reports:

• Sunita Buddhu sobbed in the courtroom [] as she expressed remorse for her role in a debt elimination scheme that left many homeowners facing foreclosure. "I'm horrified that this is the result of what we did," Buddhu said. "I thought we would be helping people, but it turned into the opposite."
  
  Buddhu, 42, pleaded guilty in October to issuing, selling and presenting fictitious financial instruments. Her father, Deowraj "Deo" Buddhu, is the alleged mastermind of the scheme.
  
  Prosecutors say the Buddhus preyed on struggling homeowners and defrauded them out of thousands of dollars by promising access to a supposed secret stash of federal money. Sunita notarized many of her father's documents and invoices. Prosecutors claim there are nearly 200 victims.

***

• Sunita's apologies to the victims did not appear to gain her any sympathy with the judge, who announced he would wait to sentence her until after her father's trial later this year. [...] Sunita Buddhu has already served almost seven months in a federal holding cell. Her lawyers were asking for a "time served" sentence.

***

• The judge said he already has a number in mind for Sunita Buddhu's sentencing and told the courtroom it would be "substantial."

For the story, see Sentencing Delayed for Debt Elimination Scheme Suspect.

Afghan/Iraq War Vet Challenges Local Ordinance Restricting Rentals; Says Rule At Fault For Leaving Him In Foreclosure, Threatening $50K In Home Equity

In Winona, Minnesota, Watchdog.org reports:

• More than a year after suing the City of Winona for preventing them from renting out their houses, three homeowners will get their day in court [] in a property rights case that’s being tracked by zoning authorities beyond Minnesota.
  
  “It’s being watched across the country because restrictions on the right to rent and other property rights are popping up in states all over the country. But the epicenter for this battle is in Minnesota, where cities have been very aggressive in denying people the right to rent out their homes,” said Anthony Sanders, the Institute of Justice lawyer who represents the homeowners.
  
  The southeastern Minnesota city implemented an ordinance in 2005 that caps the number of homeowners who can rent out their properties to 30 percent of dwellings per block.

***

• A city study of rental housing in the college community found “the concentration of rental housing results in negative impacts to the quality and livability of residential neighborhoods” and a higher incidence of nuisance and police violations.
  
  Homeowners unable to obtain a rental permit, however, say the prohibition has cost them thousands of dollars in lost rental income, while also undercutting the value of their property in the real estate market.
  
  “I could have sold it years ago. I’ve had numerous people tell me, realtors and people that own homes in the town, that they would have bought it the day I put it on the market so they could rent it out,” said Ethan Dean, a plaintiff in the case.

***

• During Dean’s five tours of duty as an U.S. advisor in Iraq and Afghanistan, the city granted him a temporary rental waiver until his return. Now that he’s back, Dean says he is in the final stages of losing the house to foreclosure, along with some $50,000 in equity. He places the blame squarely on the lost rental income and sale opportunities due to the rental ban. “It’s not just me who’s been hurt here. It’s numerous people in the Winona city district. Enough is enough and sometimes you just to stand up and say this is wrong,”
  
  The lawsuit asks the state court to strike down the rental ordinance as a violation of the homeowners’ fundamental property rights under the Minnesota constitution. “What the 30 percent rule does is it bans people from renting out their homes if a certain number of their neighbors already rent out their homes. So your property rights are controlled not by yourself or whatever tenants you have, but by your neighbors,” Sanders said.
  
  At least three more Minnesota cities have slapped similar restrictions on rental properties. Two cities with significant numbers of college-age students, Mankato and Northfield, now limit the number of rental properties to 25 and 20 percent respectively on a block. West St. Paul may have the toughest restrictions in the country, allowing just 10 percent of dwellings per block to be rented out.

For the story, see Homeowners fight rental ban in Minnesota property-rights case.

Lawyer Not Liable For $80K Deposited Into Client Trust Account Without His Knowledge, Then Subsequently Embezzled By Legal Secretary In Soured Foreclosure Avoidance Deal

In Mobile, Alabama, Alabama Live reports:

• A judge [...] determined that a Saraland lawyer had no legal obligation to safeguard money that his secretary had deposited into a client trust account. The judge ruled in the defendant’s favor.
  
  Mobile County Circuit Judge Michael Youngpeter’s ruling meant that Johnny Lane, who also is a part-time municipal judge in Chickasaw, did not have to put on a defense in the civil trial. “The judge made the right ruling,” defense lawyer Walter Honeycutt said.
  
  Robert Stankoski, who represented plaintiff Daniel Burrage, said he would discuss an appeal with his client. “I think Judge Youngpeter is a great and thoughtful judge,” Stankoski said. “But I completely disagree with his finding in this one.”
  
  The dispute centered on an $80,000 check that Burrage wrote in January 2010. According to testimony, he had agreed to pay off the mortgage of Lane’s secretary, Susan Pack, to stave off foreclosure of her home. The plan called for Pack renovating the house, selling it and splitting the profit with Burrage. The mortgage company would not halt the foreclosure unless the money was safe in an escrow account.
  
  Witnesses gave conflicting accounts of what happened next. Burrage maintained that Lane suggested the money be deposited in his client trust account, telling him it was the safest place the money could go.
  
  Lane testified that he never agreed to that. Pack testified that Lane expressed misgivings but ultimately allowed her to deposit the money.
  
  The deal went south later in the year after Lane fired Pack for failing to address her drug problem. Burrage testified that he went to Lane and asked for his investment back. It was gone, along with a bunch of other money. Pack ultimately pleaded guilty to embezzling some $195,000 form the law firm.
  
  Burrage already has won a civil judgment against Pack, but it is unlikely she ever will be able to pay the money back. Stankoski argued that Lane should be held liable because he was so detached from the day-to-day operation of his office that he allowed Pack to have unsupervised access to the law firm’s finances despite her drug problem.
  
  Lane testified that he did not realize his longtime employee was abusing drugs until shortly before he fired her. Honeycutt argued that his client had no legal obligation to protect the money that Burrage had put up because Lane had nothing to do with that transaction. “It was a private deal between Ms. Pack and Mr. Burrage,” Honeycutt said. Youngpeter agreed.
  
  During the trial, Honeycutt argued that Lane was a victim. It was his account that Pack stole from. It is Lane to whom a judge in the criminal case ordered Pack to pay restitution.
  
  Stankoski noted that Lane did not even bother to look at bank records from the time his law partner died in 2008 until he fired Pack in 2010. “You can’t stick your head in the sand like an ostrich and say you’re a victim,” he said.
  
  Honeycutt acknowledged that his client could have done a better job overseeing the financial affairs of his practice. He said Lane has not reason to suspect a trusted employee who had worked for him for 27 years. “Most lawyers are terrible businessmen,” he said.
  
  Lane’s legal headaches are not over. He still has a pending lawsuit against him by families of asbestos victims who alleged that she forged the litigants’ signatures on settlement checks that she then stole. Honeycutt said banks have paid most of those clients back.

Source: Judge rules Saraland lawyer had no legal obligation to safeguard Baldwin man's money.

Another Couple Gets Screwed Over Renting Home Offered Online; Premises A Fire Hazard & In Foreclosure

In Miami-Dade County, Florida, WTVJ-TV Channel 6 reports:

• After Army soldier Josh Wagner returned from Afghanistan to his base in Tennessee, he was stationed in South Florida.
  
  His wife found online what looked like a wonderful home in Florida City. But the Wagners’ troubles began as soon as they opened the door. “None of this was fixed. I mean, this in itself is a fire hazard,” Wagner said, pointing to an open electrical socket.
  
  After the Army helicopter mechanic came back to the U.S. from Afghanistan, he got a job in the Florida National Guard, gathered his family and pets, and headed to Florida City. But his rental home had all the electrical socket covers broken, no smoke detectors, hanging electrical wires, infestation of roaches and other violations, inspectors ultimately found.
  
  “Absolutely. Absolutely without a doubt we were had,” Wagner said. His wife, Misty Wagner, found the rental.
  
  “They told us that they loved to rent to military families and they had a beautiful home for us to stay in, and everything would be ready when we came down here,” she said.
  
  She said she saw an ad to rent a home with pictures of the rooms and what looked like a nice backyard. The owner's wife even wrote, “I am sure you will like the home an (sic) you will love it.”
  
  The Wagners signed a lease and said they give the security deposit and two months’ rent in advance, totaling about $3,300.
  
  The owner's wife, Romina Jelves, sent them a copy of her driver’s license along with her driver's license photo, the couple said.
  
  “We got copies of their licenses, their IDs, their work information, verified their bank information, and we thought it was completely legitimate,” Misty Wagner said.
  
  But she quickly told the Jelves in an email that she was shocked when she first walked into the house. “The pictures you listed on the ad did not come close to representing the true condition of this home,” she wrote, in a message from her and her husband.
  
  The Wagners said that when they started complaining about the conditions of the property, the owners told them they could simply leave, but that would mean forfeiting the $3,300 that they had put down upfront.
  
  The Wagners said they were burglarized this week, and lost their computers and televisions.
  
  Court records show the bank moved to foreclose on the homeowners two months before the rental agreement was signed. “They took our money and they left us with their issue,” Misty Wagner said.
  
  The couple that rented the property told NBC 6 South Florida they did nothing illegal.(1) They said in an email that they offered to refund the security deposit – which the Wagners dispute. The owners said they did not want to provide any more information, told NBC 6 not to contact them again, and hung up.
  
  “Do not ever rent sight unseen,” Misty Wagner concluded.
  
  Florida City’s mayor said he will try to help, and the bank and service provider that took back the home are investigating how to bring how to bring it up to code, and clear up the Wagners’ financial and living mess.

Source: Military Family's Move to South Florida Turns into Housing Nightmare (The Wagners said their troubles began when they opened the door of their Florida City rental home).

(1) Obtaining money or property by deception, or securing the execution of documents by deception may, in fact, be crimes (albeit crimes that may not be too frequently prosecuted).

Cops Continue Efforts In Probes Targeting Scammers Hijacking Possession Of Vacant Homes In Foreclosure & Renting Them Out To Unwitting Tenants

In Pearland, Texas, The Pearland Journal reports:

• For one couple hoping to find an affordable place to live, paying $900 rent each month for a 5,000 square-foot home in Shadow Creek Ranch seemed a dream come true. Months later after they moved in, made numerous repairs and spent weekends painting and decorating the house, the couple discovered they had been taken in by a sophisticated real estate scam.
  
  In recent months, Pearland Police detectives have uncovered several cases involving the same real estate scheme. In addition, investigators in Fort Bend County and League City are also investigating similar incidents. Detectives say there may be even more residents taken in by the scams. Police officials are now reaching out to community to identify other potential victims
  
  Detectives say in each case so far, lease agreements were arranged by “Homeowner Solutions,” a company that reportedly specialized in finding rental properties for those not able to qualify for a regular lease arrangement.
  
  Sugar Land-resident Kenneth Upchurch has been identified by police as the suspected business owner. According to police officials, Upchurch put his plan in motion by allegedly tracking down vacant homes in the process of foreclosure. After changing the locks and making sure the property was clean, Upchurch would find potential renters via Craig’s list or through word-of-mouth advertising.
  
  To cover his track with new renters, Upchurch allegedly refused to accept personal checks and instead required money orders that had to be mailed to a P.O. Box. Victims were also reportedly not given contracts. Instead, Upchurch allegedly gave customers only unsigned documents outlining the lease terms by mail.
  
  Police say the plan went on without a snag for several months in each case; that is until the real homeowners showed up and discovered uninvited strangers had taken up residence and called police.
  
  In the most recent case, detectives say the victims were cheated out of monies paid in rent plus their deposit. The couple was asked to move out as soon as the upset homeowners arrived.
  
  Police officials said no charges have been filed against Upchurch although he is currently considered a suspect in the case. Anyone with information related to the case or those who may think they may have been victimized are urged to call Pearland Police Det. DeSpain at 281-997-4231.

Source: Pearland detectives investigating rental property scam.

Title Insurance Underwriter Cautions Its Ohio Agents Of Effect Of New Case Law Regarding Foreclosure Standing Requirements

From the General Title Insurance Company Blog:

• The Fed. Home Mtg Corp. v. Schwartzwald case recently decided by the Ohio Supreme Court has turned foreclosure standing requirements around.
  
  This was the case in which the Ohio Supreme Court held that a lender must have standing to foreclose on the date the complaint is filed in order to proceed to final judgment. If they do not “hold” the mortgage and note, via assignment or otherwise, on the date the complaint is filed they are not the real party in interest for purposes of foreclosure and they are not entitled to a judgment through the jurisdiction of the court.
  
  As a result of this case, we required all Ohio title agents to use the following requirement on all future title insurance commitments with the admonishment that further guidance would be forthcoming: “Per the Ohio Supreme Court’s holding in Fed. Home Loan Mtge. Corp. v. Schwartzwald, 2012-Ohio-5017, the Insurer requires filing and proper service of a new Complaint in Foreclosure naming the assignee under Instrument dated DATE, and filed for record on DATE, in the YYYY County, Ohio Recorder’s Office, as the plaintiff and real party-in-interest in said action.”
  
  Since lack of jurisdiction cannot be cured by the passage of time, defeated with a laches or bona fide purchaser defense and impervious to prospective application, we must now take the steps to except the result of the Schwartzwald case entirely.
  
  Therefore, all Ohio title agents should replace the requirement above with the following language, including those transactions insuring the successful bidders at Sheriff’s Sale, or said purchaser’s lender and insuring parties to an REO transaction.
  
  What is the new guidance for Ohio title agents? In the event you find a foreclosure where at the time of the filing of the complaint the lender was not the holder of the note and mortgage, please use the following guidance for Ohio purchase transactions, including those involving Sheriff’s Sales and REO transactions:
  
  “The Policy does not insure, and the Company will not be liable for attorney’s fees and defense costs, against loss or damage by reason of an attempt to void and set aside the foreclosure judgment and subsequent sale, or a decree voiding and setting aside the foreclosure judgment and subsequent sale, in case captioned ____________v. ____________, Case No. ___________, [name of county] Court of Common Pleas, Ohio.”
  
  The above-referenced exception must appear in both the title commitment and the title insurance policy.

For more, see Ohio Agents: Be Aware of Recent Ohio Case Law (Dec.10, 2012).

Thanks to Deontos for the heads-up.

Detroit Feds Pinch Recently-Resigned State High Court Justice On Charges Related To Alleged Illegal 'Short Sale Shuffle'

In Lansing, Michigan, The Detroit News reports:

• Former Michigan Supreme Court Justice Diane Hathaway is scheduled to appear Jan. 29 in federal court on a bank fraud charge stemming from a real estate scandal that caused her to resign from the high court Monday.
  
  Hathaway is expected to enter a plea on the charge during a 10:30 a.m. appearance before Judge John Corbett O'Meara at the federal building in Ann Arbor. The U.S. Attorney's office in Detroit on Tuesday confirmed the date of the court appearance.
  
  Federal prosecutors filed a bank fraud charge Friday against Hathaway, accusing her of concealing and transferring assets to stepchildren in a scheme to fool mortgage lender ING Direct into believing she and her husband, attorney Michael Kingsley, had a financial hardship.
  
  The bank approved the couple for a short sale, allowing Hathaway and Kingsley to unload a $1.5 million Grosse Pointe Park home for about $600,000 less than they owed. The charge is listed as a criminal "information," meaning a guilty plea is likely.
  
  Though the maximum penalty for bank fraud is 30 years in prison, federal sentencing guidelines call for 27 to 33 months in prison for someone facing a first offense and who defrauds a bank of more than $400,000, according to Wayne State University law professor Peter Henning.
  
  Hathaway's attorneys have previously argued she and Kingsley saved the bank money by not allowing the home overlooking Lake St. Clair to fall into foreclosure and be subjected to an auction, where the sale price could fluctuate.
  
  In a related civil case, U.S. Attorney Barbara McQuade is trying to seize Hathaway and Kingsley's second home in suburban Orlando, valued at $664,000 in 2010, to compensate for the $600,000 in mortgage debt the couple allegedly defrauded the bank.
  
  Kingsley has not been charged.
  
  Public and legal scrutiny of the questionable short sale caused Hathaway to resign her seat on the Supreme Court halfway through an eight-year term. Before being elected to the Supreme Court in 2008, Hathaway was a Wayne County judge.
  
  Hathaway, a Democratic Party nominee, is the first sitting Supreme Court justice to be charged with a crime since 1975 when Justice John Swainson was indicted for bribery and lying to a federal grand jury. Swainson, a former governor, later beat the bribery charge, but served a brief sentence for a perjury conviction.

Source: Justice Hathaway in court Jan. 29 for fraud charge in real estate case.

Felony Charges Continue For California Homeowners Allegedly Recording Phony Documents In Effort To Stall Foreclosure

In Stanislaus County, California, The Modesto Bee reports:

• Authorities appear to be taking foreclosure fraud prosecution to a new level in Stanislaus County, with possible implications elsewhere in California.
  
  A Turlock couple face felony charges of trying to stall foreclosure of their property by filing phony documents with the county recorder, similar to cases launched last month against four other homeowners in this county.
  
  But this time, state prosecutors — not local — will handle the case. And court documents suggest that authorities may go after supposed masterminds accused of running a fraud scheme from Southern California.
  
  "We have not filed anything yet against the so-called kingpins, but we're not going to ignore where this case is leading," said Leslie Westmoreland, deputy California attorney general.
  
  Westmoreland recently filed a felony complaint against Blas and Nancy Arreola of Turlock alleging multiple counts of identity theft, recording false or forged documents, and fraud conspiracy.
  
  Blas Arreola, 37, initially was arrested in June, and he and his 34-year-old wife are scheduled to appear Tuesday at an arraignment. A state prosecutor is expected to ask that they be held with bail set at $412,000 and $201,000, respectively — far more than in previous similar cases. A phone number for the couple has been disconnected, and they could not be reached.
  
  They were tutored by Jacob and Aide Orona of Highland in San Bernardino County, according to an arrest warrant affidavit for the Arreolas filed by investigator Glenn Gulley of the district attorney's office. Calls to a number associated with the Oronas' address and business, Document Recovery Forensic LLC, went unanswered.

For more, see Prosecution of foreclosure fraud hits higher gear in Stanislaus County.

Financially Strapped Elderly Veteran Files Suit Accusing R/E Operators Of Stripping Equity From His Free & Clear Home

In Seattle, Washington, Seattle Weekly reports:

• With this week's $3.3 billion settlement by banks who engaged in faulty foreclosures, you might think that the worst tales of the housing bust are behind us. But the predators of the foreclosure era are still out there, still making money on other people's misery.
  
  According to a complaint filed last month in King County Superior Court, just such a scenario happened to Ames Larson.
  
  Larson is a 67-year-old Vietnam veteran and former prisoner of war who, as recently as this past December, owned his three-bedroom Lake City home free and clear. But that's about all he owned. He lived on roughly $1,100 a month, most of it coming from Social Security, according to his attorney, David Leen, who recently started a non-profit called the Northwest Consumer Law Center. Larson couldn't afford to pay his utility bills; Leen think he was using candles for light. He also couldn't keep up with his property taxes.
  
  Had he known about King County programs for seniors offering tax relief, he probably could have qualified, according to Leen. But he didn't. In June of last year, the county initiated tax foreclosure proceedings against Larson. To stop it, he needed to come up with $11,000.
  
  He didn't have it. In October, however, several representatives from a business called Northwest Home Buyers knocked on Larson's door. "We buy homes: any house any condition," declares Northwest's website, which also proclaims the ability to provide "quick cash" for homeowners facing foreclosure and other difficult situations.
  
  The Northwest representatives offered Larson $120,000 for his home, according to the complaint But when another company representative, by the name of Chris Lundquist, showed up at the house a month later with paperwork for Larson to sign, the offer was reduced to $70,000. Zillow estimates the house to be worth a little over $300,000.
  
  Leen says Larson felt he had no choice but to sign. His house was scheduled to be foreclosed upon in just two weeks. In the end, he came away with only about $40,000, after payment of back property taxes and various transaction fees, according to Leen.
  
  Lundquist, a defendant in the lawsuit, did not return a phone call seeking comment and the person answering Northwest's phone line said he was too busy to talk.
  
  What happened after Northwest got its paperwork signed by Larson is a little complicated and indicates the intricate dealings of companies who make their money on distressed properties. Northwest never bought the home, Leen says, but turned it over to another company called Lynx Development. Lynx is managed by a man named Will Heaton, the same man who manages a lending company known as Intrust Funding, which provided a $143,500 loan to finance the sale, according to the complaint. Intrust specializes in providing "fast capital" by creating "loan scenarios that cannot be adequately handled by traditional lending sources," according to its website.
  
  The complaint alleges that the money obtained through the loan was then distributed to an array of people and businesses that somehow participated in this deal, including Lundquist (who got $22,500) and yet another company managed by Heaton called Invest Now (which got nearly $50,000).
  
  It was all a way of "stripping money out of the house," says William Snell, an attorney who is working with Leen on the case.

For the story, see Foreclosure Predators Prey Upon Vietnam Vet Who Owed $11,000 in Taxes, Lawsuit Claims.

Business Partners File Suit Accusing Their Attorney Of Forging Deed To Swipe Title To Company's Real Estate

In Galveston, Texas, The Southeast Texas Record reports:

• Alleging a Humble attorney committed forgery to gain ownership of their company’s real estate property, Robert M. Green and Barbara Goostree pursue legal action.
  
  A lawsuit filed Jan. 8 in Galveston District Court asserts that J. Richard McGoey fraudulently executed a deed to transfer property belonging to Green Diesel Inc.
  
  The suit says the plaintiffs entrusted the responsibilities of maintaining the corporate records and the good standing of the company to McGoey, however, the defendant failed to do so.
  
  Plaintiffs also allege the attorney misrepresented Green Diesel, and claimed to be its president.
  
  Green and Goostree argue McGoey prepared the deed in January 2004, without their knowledge, using Green’s signature.
  
  They insist Green did not know about the document’s existence until last month, and when he saw reportedly saw it, he noticed his name was misspelled.
  
  The original petition adds a notary public named Dianne Lynn Abrahamsen stamped the subject paperwork which apparently carried an acknowledgment that Green appeared before her on Jan. 4, 2004.
  
  Green denies the meeting with Abrahamsen, who is a co-defendant along with McGoey’s spouse, and maintains she was not a notary public at the time of the supposed notarization.
  
  He also says that he did not approve the 2004 sale that is the focus of the litigation.
  
  The complainants point out that the McGoeys participated in a recent transaction with Equipment International Pension Fund for approximately $140,000, but the latter “wrongfully kept all of the funds paid for the purchase of the real estate paid by the buyer.”

Source: Suit accuses Humble attorney of forging real estate deed.

$38K In Cannabis Seized From Basement-Based Mini-Pot Farm To Cost BC Couple $230K In Home Equity Through Gov't Forfeiture Proceedings

In Kamloops, British Columbia, The Kamloops Daily News reports:

• A retired Heffley Creek couple with a mom and pop grow-op in the basement of their $660,000 log home agreed to forfeit more than a third of the value of the property after a raid by RCMP.
  
  Bruce and Ingrid Duncan signed a consent order giving up 35 per cent of the value of their home and acreage under a measure contained in the Controlled Drugs and Substances Act.
  
  Police found about 200 pot plans in a hydroponic operation in the basement of the couple’s 3,000-foot log home in a March 2010 bust.
  
  Bruce Duncan, 62, pleaded guilty in B.C. Supreme Court to possession of marijuana for the purpose of trafficking. Charges against his wife were stayed by the Crown. The couple, married 42 years, were arrested when they returned home in the afternoon to find police inside.
  
  Crown prosecutor Anthony Varesi said the forfeiture for the “moderately sophisticated” grow-op means the couple is on the hook for an equivalent of $230,000. The pot, if brought to market, was estimated to be worth about $38,000.

***

• Varesi said those caught under forfeiture proceedings often sell their property in order to come up with the equivalent in cash. The Crown’s 35 per cent interest will be registered on the property title.
  
  In addition to the forfeiture, B.C. Supreme Court Justice Ian Meiklem gave Duncan an 18-month conditional sentence, including six months of house arrest.
  

For the story, see Grow-op bust costly for retired couple (Husband and wife give up 35 per cent of value of home and acreage).

Scrutiny Increases On Texas Lenders Specializing In Unpaid Real Estate Tax Refinancing Schemes That Smell Like Predatory Near-Usurious, Inflated Fee Rackets

Deep in the heart of Texas, Forbes reports:

• The housing meltdown over the last several years claimed many victims. But in Texas, it keeps creating new ones: the thousands of homeowners who fall prey to property-tax lenders that help them pay overdue property taxes. So now there’s an effort in the new 83rd session of the Texas legislature to prevent property-tax loans from financially disabling still more Texans.
  
  It turns out that thousands of homeowners not only have ponied up nearly usurious rates to property-tax lenders to get themselves out of a big financial squeeze but also that this specialized group of lenders legally jumps to the front of the line — even ahead of primary mortgage holders, and state and local governments with non-property-tax liens – when it comes to disposition of assets from subsequent foreclosure or sale of the house.
  
  And property-tax lenders can use “expedited foreclosure,” which has limited judicial involvement and doesn’t allow for scrutiny over certain fees and costs claimed by the lender.
  
  “It’s a pretty significant issue here, because Texas derives lots of dollars from our property-tax system because we don’t have an income tax,” explained Robert Doggett, an attorney for Texas Rio Grande Legal Aid, an Austin-based not-for-profit consumer-advocacy organization.(1) “So property-tax bills are pretty high.”
  
  Under these loans, including all fees and interest and other charges by the property-tax lender, “a $10,000 tax bill can turn into a $15,000 to $18,000 bill pretty quickly,” said Steve Scurlock, executive vice president of the Independent Bankers of Texas. “We’re questioning that and looking at potential legislation to address that.”
  
  One key point, Scurlock said, is that while property-tax lending is legal in Texas, the marketing practices of some companies are less than savory — and, therefore, add to the problem. “Some of their marketing schemes are on the deceptive side,” he said. “They make everything look easy and official.”
  
  While a unit of local government might let delinquent property taxes for a hard-pressed household slip for as long as two or three years, homeowners can feel undue pressure when they get a solicitation from a property-tax lender that warns of dire consequences if the homeowner doesn’t borrow money now to pay off the tax.
  
  It’s not that Texas cities and counties, and bank lenders, are sympathetic figures to Texas homeowners or anyone else. The concern is that the property-tax lenders are a predatory group that only have their immediate financial self-interests at heart. Whatever anyone can say about local governments and banks, they have many reasons to include the interests and needs of taxpayers and customers in their actions concerning delinquent taxes.
  
  “A lot of folks are tricked into getting a loan that they don’t really need that is very expensive and is serviced by an entity that doesn’t have their interests at heart and has only its own financial motives at heart,” Doggett explained, “unlike [officials of] taxing entities that aren’t going to lose their jobs one way or another if they don’t squeeze more dollars out of a low- to moderate-income family.
  
  Delinquent borrowers “jump from a frying pan into a fire” by succumbing to the lures of a property-tax lender, he said. “Miss a couple of payments and that lender will be all over you.”
  
  “And with their superior-lien status, they’re going to get their money no matter what. At least a [regular] lender has restraints. These people have none — all the benefits of government in their superior-lien status, but no checks and balances that government and elected officials have.”

For more, see Predatory Property-Tax Lenders Are Targeted In Texas Effort.

(1) Texas RioGrande Legal Aid (TRLA) is a non-profit organization that provides free legal services to low-income residents in sixty-eight counties of Southwest Texas, and represents migrant and seasonal farm workers throughout the state of Texas and six southern states: Kentucky, Tennessee, Alabama, Mississippi, Louisiana and Arkansas.

Real Estate Tax-Delinquent Hubby Challenges Town's Foreclosure, Saying It Only Notified Co-Owner/Wife Of Legal Proceedings; New Owners Took Title 3+ Years Ago, Still Waiting To Take Possession

In Portland, Maine, the Bangor Daily News reports:

• The Maine Supreme Judicial Court is considering the case of a Madawaska man embroiled in a dispute against another man over ownership of a home lost to foreclosure more than three years ago.
  
  The high court heard oral arguments in the case of Jeffrey Stoops v. Richard Nelson on Tuesday at the Cumberland County Courthouse in Portland.
  
  Jeffrey Stoops and his wife, Jeanne, were represented by attorney Jeff Ashby of Presque Isle. Richard Nelson was represented by Richard Solman, a Caribou attorney.
  
  Jeffrey and Jeanne Stoops were the original owners of a home in Madawaska, which they lost to foreclosure in 2006 for failure to pay municipal taxes. The town subsequently sold the property in 2009 to Richard Nelson. Jeffrey and Jeanne Stoops have retained residency while attempting to seek relief in court.
  
  Before the Law Court, Jeffrey Stoops was appealing a judgment entered in Aroostook County Superior Court by Justice E. Allen Hunter. It granted summary judgment to Richard Nelson and his wife, Betty, declaring them the owners of the home lost by the Stoops to foreclosure.
  
  On Tuesday, Ashby argued that the Superior Court erred in granting the motion because the town of Madawaska failed to give his clients proper notice of the pending foreclosure in violation of the due process clause of the Fourteenth Amendment.
  
  He also argued that the town failed to strictly adhere to a state statute which outlines the steps a municipality must take in order to foreclose a municipal tax lien.
  
  According to court documents, a 30-day notice sent by the town of Madawaska to Jeffrey and Jeanne Stoops regarding 2004 delinquent taxes was accepted and signed by Jeanne Stoops. Such a notice is required by law and informs the party that they could lose their property if the taxes are not paid.
  
  Later, the town also sent a notice of impending foreclosure relating to a 2005 tax lien, which was also required by law. It was addressed to the couple and accepted and signed by Jeanne Stoops. It warned that foreclosure would occur in December 2007 and if that happened, the town would own the home.
  
  Solman said Tuesday that the town went “above and beyond” its statutory obligations as far as notifying the couple that their taxes were delinquent and that they were at risk of losing their home.
  
  Ashby, however, argued that Jeffrey Stoops was a key part of the process and the town should have done more to assure that both property owners were aware of what was taking place. The town mailed letters related to delinquent taxes to Jeffrey Stoops, but both attorneys acknowledged confusion over whether they were received. One notice sent certified mail was returned unclaimed.
  
  Chief Justice Leigh I. Saufley questioned Ashby about how the couple could not have understood that they were in danger of losing their home.
  
  “Jeanne Stoops signed the two letters sent by the town,” she said on Tuesday. “How can she say that she did know the process?”
  
  Solman said on Thursday that his clients were just anxious for the case to be over.
  
  “They lawfully purchased this home back in 2009 and they have not even had a chance to live in it,” he said. “And they are paying the taxes on it. They are just hoping to get this resolved so they can take possession.”
  
  Ashby did not return calls seeking further comment.

Source: Maine Supreme Court considering dispute over ownership of foreclosed Madawaska home.

Land Court Judge OKs Real Estate Tax-Delinquent Property Owner's Effort To Redeem Home & Void Tax Foreclosure; Reverses Town's Earlier Decision To Refuse Back Payments & Snatch Premises

In Middleboro, Massachusetts, The Enterprise reports:

• A Land Court magistrate overturned a selectmen decision and granted a man’s plea to pay his back taxes and avoid losing his property to the town.
  
  “That’s what I expected,” selectmen Chairman Alfred P. Rullo Jr., said about the ruling, declining further comment.
  
  On Jan. 7, selectmen unanimously denied a request by John and Rose Ewas to vacate the foreclosure on their property.
  
  On Thursday, Boston Land Court Clerk Magistrate Deborah J. Patterson overturned the selectmen’s denial and granted John Ewas’ request to vacate the foreclosure.
  
  The issue dates back to September 2011, when the Ewases’ property at 4 Vine St. was foreclosed on and the title transferred to the town for back taxes for the years 2004, 2006, 2009, 2010 and 2011. By September 2012, Ewas began proceedings to redeem the property, which culminated in the Jan. 7 selectmen’s hearing.
  
  Judge Patterson said Ewas was within the one-year legal time limit to make a motion to void the foreclosure.
  
  “If a town opposes the motion to vacate, I will hear the argument,” Patterson said, adding it is within her jurisdiction to allow Ewas to pay the back taxes. Patterson stipulated that Ewas must pay the taxes in full and instructed the town to provide the court with an itemized bill.

For the story, see Judge overrules Middleboro selectmen on home foreclosure.

Homeowner Lawsuit: Law Office Charged Me Ten$ Of Thousand$ For Foreclosure Defense, Yet Had Me File As 'Pro Se' Defendant

In Chicago, Illinois, Courthouse News Service reports:

• A "foreclosure defense" office charged a client $41,000 for "filing fees" and charged her for filing her own legal work, telling her filing pro se would "give her an advantage" on appeal, the woman claims in court.
  
  Lori Lappas sued Illinois Foreclosure Defense LLC and Innocent Obi, in Cook County Court. The brief, 4-page complaint contains a welter of alarming allegations.
  
  Illinois Foreclosure Defense is "owned by two attorneys who provide legal services for clients," the complaint states, and Obi is and was their employee.
  
  The complaint does not state that Obi is an attorney, but Lappas says he was her "only contact" with the office.
  
  She says she hired the defendants in January 2012 to represent her in two foreclosure cases.
  
  "Lori Lappas paid Illinois Foreclosure defense in excess of $20,000 over the last 10 months," the complaint states.
  
  It adds: "That in addition to the defense of the two foreclosure lawsuits, Innocent Obi and Illinois Foreclosure Defense agreed to represent Lori Lappas in three additional lawsuits and represent her with yet a fourth matter with regard to issues with the Internal Revenue Service.
  
  "That for each of the cases and the issue with the IRS, Ms. Lappas paid retainer fees to the Illinois Foreclosure Defense.
  
  "That for each of these three additional lawsuits and with the representation Innocent Obi and Illinois Foreclosure Defense did no work and refuses to refund any of the retainers paid [by] Ms. Lappas."
  
  "That with respect to the original foreclosure cases Innocent Obi had, despite being paid as attorneys for Ms. Lappas, had Ms. Lappas file appeals as pro se defendant with Illinois Foreclosure Defense and Innocent Obi not only did the actual filing of the pro se filings but further cut and pasted Ms. Lappas's signature without her authority.
  
  "That with the pro se appeals, such appeals were prepared by Obi Innocent on behalf of Illinois Foreclosure Defense yet had Ms. Lappas file pro se and also had her pay retainer fees for those appeals.
  
  "That Ms. Lappas was told that filing pro se would give her an advantage in the appellate court.
  
  "That these appeals have not halted any prosecution of the foreclosure cases nor had any advantage to Ms. Lappas."
  
  To cap it off, Lappas says: "That before Ms. Lappas left town on October 23, 2012, Ms. Lappas left a blank signed check with Innocent Obi and Illinois Foreclosure Defense in order to pay any needed filing fees or her monthly $400 fee if she could not be reached.
  
  "That upon her return Ms. Lappas found that Innocent Obi had written out the check for $41,000 to Illinois Foreclosure Defense; further noting that the check was written the same day Ms. Lappas left town on October 23, 2012."
  
  Lappas says she has repeatedly asked for "copies of all work completed by Illinois Foreclosure Defense," but "was never given any copies."
  
  She seeks damages for fraud and breach of contract, and says her damages "include but are not limited to the loss of her homes."

Source: The Worst Law Office in the World?

Phony Real Estate Agent Pinched For Grand Theft After Allegedly Selling Home That Didn't Belong To Him; Victimized Family Coughed Up $25K To Move In, $20K More In Fix-Up, Then Got The Boot From Foreclosing Bank

In Miami, Florida, Miami New Times reports:

• In January 2011, Renan Rico bought a home for $25,000 and moved his family in. Then, after completing tens of thousands of dollars of renovations, he started receiving notices that the home was owned by a bank and under foreclosure.
  
  Turns out the realtor they bought it from, Ricardo Ribas, didn't own the home. Nor did he represent the people that did. Nor was he actually a realtor. Basically, he was an "unrealtor."
  
  Ribas had pretended to be a realtor, and in the case claimed that he had bought the home he was selling along with several others at auction.
  
  Rico and his family moved in, even thought they didn't receive the title. Ribas told him that the closing was pending. In the meantime Rico had spent $20,000 upgrading the home.
  
  The bank eventually forces Ribas and his family out of the home.
  
  Police arrested Rico [] on charges of grand theft. They believe that others victims may have also fallen for his scam. Anyone who may have dealt with Ribas is asked to call Economics Crime Bureau at 305-994-1000.

Source: Fake Realtor Ricardo Ribas Arrested For Selling Home He Didn't Own.

Baltimore Feds Indict Six In Alleged Straw Buyer Scam Designed To Generate Cash Proceeds That Were Subsequently Pocketed While Leaving Existing Mortgages Unpaid

From the Office of the U.S. Attorney (Baltimore, Maryland):

• A federal grand jury has indicted six defendants for conspiracy in a $4.5 million mortgage fraud scheme: [...](1)

***

• The indictment alleges that Kreamer worked at Sanford Title Services LLC located at 8900 Snowden River Parkway, Columbia, Maryland. In 2002, her Maryland license to issue title insurance policies was revoked.
  
  From June 2008 to January 2010, Kreamer, Williams, Scott, Udeze and Peete allegedly arranged for individuals, including Green, to buy and sell real estate so they could improperly obtain money from the transactions.
  
  Kreamer, Williams, Scott, Udeze and Peete are alleged to have created multiple versions of settlement statements to deceive lenders, lien holders, buyers and sellers; and arranged for proceeds from mortgage transactions to be disbursed to shell companies created by the defendants in order to disguise that the money was really for their benefit.
  
  Kreamer and Sanford Title failed to make required disbursements of settlement funds to pre-existing lien holders, funneling the money instead to themselves.

For the U.S. Attorney press release, see Six Defendants Indicted in $4.5 Million Mortgage Fraud Scheme (Defendants Used Sanford Title Services and Shell Companies to Fraudulently Disburse Settlement Proceeds to Themselves).

(1) Bonnie Kathleen Kreamer, a/k/a “Bonnie Meehan,” age 47, of Riva, Maryland; Niesha Williams, age 33, of Fort Washington, Maryland; Rhonda Scott, age 51, of Oxon Hill, Maryland; Emeka Udeze, age 37, of Bowie, Maryland; Demetrius Peete, age 45, of Manassas, Virginia; and Gregory Green, age 49, of Waldorf, Maryland.

Prosecutors To Push For 14 Years For Scam Head Who Used Control Of Entire R/E Closing Process To Pocket Refinance Procceds From 40+ Victimized Homeowners, Leaving Dozens Of Existing Mortgages Unpaid; Squealing Confederates Expect Probation, Dodge Jail

In Freehold, New Jersey, the Monmouth County Prosecutor's Office recently announced:

• Frederick Tropeano pleaded guilty [] to laundering millions of dollars through an extensive mortgage refinance fraud scheme that victimized more than 40 homeowners in New Jersey and New York, Acting Prosecutor Christopher J. Gramiccioni announced.
  
  Tropeano, 46, of Holmdel, pleaded guilty to first-degree financial facilitation of criminal activity (money laundering) before Monmouth County Superior Court Judge Ronald L. Reisner.
  
  Tropeano, who has been incarcerated in lieu of bail since the date of his arrest on July 21, 2010, was remanded to the Monmouth County Correctional Institution. Tropeano’s sentencing was scheduled for March 22.
  
  In accordance with his plea agreement, the Monmouth County Prosecutor’s Office will recommend that Tropeano is sentenced to 14 years in prison, with a 7-year period of parole ineligibility. The Office will also recommend that Tropeano be required to make full restitution to his victims as a condition of his sentence.
  
  The year-long investigation revealed that Tropeano and a number of his associates from Hawthorne Capital Corporation (Hawthorne), formerly of Manalapan and New York City, engaged in a systematic scheme to defraud dozens of homeowners and financial institutions throughout New Jersey and New York – a fraudulent investment system often referred to as a “Ponzi” scheme.
  
  The investigation began in May 2010 after a homeowner contacted the Office regarding concerns she had about her home refinance with Hawthorne. The homeowner indicated that a check sent by Hawthorne, that was intended to pay off her original mortgage, had bounced with non-sufficient funds to support its deposit.
  
  Further investigation uncovered widespread and ongoing fraud within the company, to include 11 additional homeowners who were defrauded by Hawthorne in the refinance of their homes, as well as an attorney in New York whose identity had been stolen and used in furtherance of the fraud.
  
  The president of Hawthorne was identified in corporate filings as Silvano Tropeano, the father of Frederick Tropeano. Hawthorne had offices in New Jersey, New York and Pennsylvania, although the principal location of its operations was in Manalapan. Frederick Tropeano was identified as the individual responsible for the daily business operations at Hawthorne.
  
  The mortgage refinance fraud scheme was perpetrated by Tropeano and his conspirators’ ability to manipulate and control the entire property settlement process. An example of the fraud scheme is as follows:
  
  Homeowners would refinance with Hawthorne and banks would thereafter issue mortgage funds at settlement to refinance the properties. Rather than using these funds to appropriately pay off a homeowner’s original mortgage, Tropeano and his conspirators diverted and stole settlement funds and used the money to enrich themselves or members of their families, or alternatively used them to pay other outstanding and unrelated business debts.
  
  Two title [companies] directly involved with Hawthorne - “Hawthorne Abstract” and “Rapid Abstract” – intentionally failed to conduct proper records checks to determine whether prior mortgages were being paid.
  
  Title companies are required to ensure that original mortgages are paid in full, and new refinance mortgages are properly recorded as an existing mortgage debt. Since Tropeano and his associates operated these related title companies, they effectively controlled the entire “vertical” refinance process and were therefore able to defraud homeowners who expected their homes to be refinanced, and banks that expected to have mortgage debts repaid or new debts properly recorded.
  
  As the investigation progressed, investigators determined that more than 40 homeowners had been victimized by Hawthorne’s refinance scam. In some instances, funds that were intended to pay off the homeowners’ original mortgages were significantly delayed, resulting in negative reports on their credit scores and the need to hire legal counsel.
  
  In other instances, payoffs never occurred, leaving the homeowners with two mortgages attached to their properties.
  
  Tropeano and his associates also stole the identities of two homeowners who had filled out initial refinance applications, and illegally used these identities to cause financial lending institutions to fund refinances that never actually occurred.
  
  The total amount of calculated theft perpetrated by Tropeano and his associates was more than $7.5 million.
  
  To further the refinance fraud scheme, Frederick Tropeano and Silvano Tropeano established fraudulent bank accounts in the names of two attorneys, and listed them as the settlement agents on mortgage refinances without their knowledge or consent.
  
  Co-defendant John Kosta conducted the closings on the new mortgages and also notarized documents required for the closings, despite the fact that Kosta was not a notary or licensed to conduct such closings.
  
  As a further part of the scheme, co-defendant Krista Selig, Esq., was listed as the settlement attorney on 12 fraudulent closings and facilitated the fraudulent transactions on behalf of Hawthorne.
  
  Silvano Tropeano, John Kosta, and Krista Selig, Esq. all pleaded guilty earlier last year to third-degree conspiracy charges before Superior Court Judge Thomas F. Scully and are pending sentence. Selig also pleaded guilty to a single third-degree theft count.
  
  All defendants agreed to cooperate in the prosecution of their co-defendants and are expected to receive probationary sentences.(1)

For the Monmouth County Prosecutors's Office press release, see Fraudster Admits To Laundering More Than $7.5 Million, And Defrauding Dozens In Widespread Mortgage Refinance Fraud Scheme.

(1) "When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed." United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) (referring to the not-uncommon 'race to the prosecutor's office' that breaks out among participants in an 'about-to-fall-apart' criminal conspiracy).

Misapplication Of Entrusted Property Lands Ex-Closing Attorney Four Years After Pocketing $237K+ In Client's Refi Cash; Failed To Pay Off Existing Lien, Leaves Homeowner With Two Mortgages & Facing Foreclosure

In Freehold, New Jersey, NJ.com reports:

• A former Freehold attorney was sentenced to four years in prison for misappropriating her clients mortgage funds, the prosecutor’s office said Friday.
  
  Deirdre Przygoda, 48, was representing a client who was refinancing her home and was given more than $237,000 to pay off the original mortgage, Acting Prosecutor Christopher Gramiccioni said in a news release. The attorney removed the funds, which had been deposited in her trust account, he said.
  
  Since the original mortgage was not paid off, the homeowner now has two mortgages attached the property, and it’s in foreclosure, Gramiccioni said.
  
  Przygoda pleaded guilty Nov. 13, 2012 to second-degree misapplication of entrusted property. In addition to the prison sentence, she was ordered to pay $237,444 in restitution.(1)

Source: Former attorney sentenced to prison for misusing client's money.

(1) To the extent the victimized homeowner can't collect any money on its restitution judgment from the attorney, he/she may consider filing a claim (if one hasn't already been filed) with the New Jersey Lawyers' Fund for Client Protection, which was established to reimburse clients who have suffered a loss due to dishonest conduct of a member of the New Jersey Bar. According to the Fund's website, for loss claims that are determined to be eligible for a reimbursement there currently is a limit of $400,000 per claimant for claims arising after January 1, 2007 and an aggregate maximum for claims against a single attorney of $1,500,000. Lower per claimant maximums apply to claims arising prior to January 1, 2007, its website states.

For similar funds established to reimburse clients who have suffered a loss due to the dishonest conduct of attorneys in other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (courtesy of the American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map.

Maps available courtesy of The National Client Protection Organization, Inc.

NYC HOA Tags Unit Owner With Suit Claiming Smoke From Pot Parties Goes Through Walls, Air Vents & Wafts Into Neighboring Units

In New York City, the New York Post reports:

• This co-op says its going to pot, thanks to one of its residents.
  
  The board of The Fontaine, on the Upper East Side, is suing the longtime occupant of Unit 8B, claiming the man’s guests spark up so much marijuana in his apartment that the acrid smoke wafts into neighboring units.
  
  In the lawsuit filed in Manhattan Supreme Court yesterday, a property manager for the co-op at 353 E. 72nd St. blamed all the purple haze in the building on Richard Kempter, 73, who has lived in the apartment for 12 years.
  
  “Problem is that the stepson and a group of his friends use the apartment as a place to smoke marijuana when Richard is away,” the manager said in the filing.
  
  There’s so much pot smoke coming from 8B, the suit alleges, that one neighbor opened the “dishwasher on a clean load of dishes and the smell was overwhelming,” court documents claim.
  
  “The smell of VERY strong marijuana is wafting in through the vent in the bathroom and the stench goes right to my bedroom. This is so offensive, you have no idea,” one resident complained in the suit.
  
  Another griped, “It is 10:45 p.m. and my apartment smells like a party was going on while I was out for the evening . . . The stench of musty pot that is lingering in my closet is unbearable.”(1)

For the story, see UES neighbors sue over pot smoke.

For the lawsuit, see Board of Directors of the Fontaine Owners Corp. v. Kempter.

(1) For another post on building residents complaining about pot smoke seeping through the walls and vents, see Class Warfare Breaks Out In NYC 'High' Rise Between Haves, Have Nots; Cannabis Smoke Wafting Thru Vents Triggers Call By Rich To 'Weed' Out Pot-Smoking Poor.