Monday, July 11, 2016

Irregularities, Phony Bidders Continue Unabated At Central Florida Condo Lien Foreclosure Sales Involving Property Controlled By Rent-Skimming Real Estate Operator

In Tampa, Florida, the Tampa Bay Times reports:
  • Several times this year, a woman with the intriguing name of Sadie Daiquiri has been the winning bidder at Tampa Bay foreclosure auctions.

    Daiquiri has an intriguing address, too — 1 Dag Hammarskjold Plaza in New York City. That's a 49-story tower near the United Nations headquarters that houses the permanent missions of France, Italy and several other countries.

    But it turns out that there is no Sadie Daiquiri in Manhattan, or anywhere else. So it wasn't totally surprising that she defaulted on the bids, failed to pay up and forced the auctions to be rescheduled.

    Daiquiri is one of three phony bidders whose names have repeatedly popped up at bay area foreclosure auctions — all involving houses linked to a Tampa company called HOA Problem Solutions. By walking away from their bids, they've enabled HOA Problem Solutions to continue to collect thousands of dollars in rent from houses facing foreclosure even while the company is under investigation by Attorney General Pam Bondi's office.
    ***
    HOA Problem Solutions, which still has an active website, is run by Jimmy Chancey and his uncle Michael Chancey. They did not return calls for comment.

    Over the past three years, HOA Problem Solutions has gained control of dozens of Tampa Bay houses that face foreclosure because the owners are delinquent on their homeowner association fees. Associations depend on the fees to maintain and upgrade pools, walkways and other common areas. When the owners don't pay, the association can foreclose through a process that allows it to recoup the amount of the delinquent fees.

    Typically, HOA Problem Solutions pays the homeowner anywhere from a few hundred to a few thousand dollars to deed over the property. Then the company can rent the house back to the owner or find another tenant until the house is set for sale at a foreclosure auction.

    If the winning bidder doesn't pay up, the sale has to be rescheduled. The association can't recoup the delinquent fees but HOA Problem Solutions can continue collecting rent.

    Bidding under fake names is relatively easy today because all four bay area counties — Hills­borough, Pinellas, Pasco and Hernando — have moved to online auctions that work like this: A bidder creates an account with a username and password and makes a deposit equal to 5 percent of the anticipated bid amount, payable by electronic check, wire transfer, cashier's check or cash.

    Winning bidders must pay the balance by 4 p.m. the day of the sale. If they don't pay up, they forfeit the deposit.
For more, see Sadie Daiquiri and other phony foreclosure auction bidders are profitable ploy for Tampa company.
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(1) Assuming there is an existing prior mortgage that is in default at the time of the foreclosure sale, the perpetrators of this racket could be treading on potentially felonious ground.

Continuing to pocket the rent on a property leased to another while stiffing the mortgage holder on its loan payments is loosely referred to as rent skimming, or equity skimming. In the state of Florida, whether or not this practice rises to the level of a crime will depend on, among other things, how frequently the suspect engages in this practice, and who is getting screwed over. See Sec. 697.08, Florida Statutes:
  • 697.08 Equity skimming.—

    (1) It is unlawful for any person, with intent to defraud the owner of real property, to engage in equity skimming, which is, to:
    (a) Purchase, within a 3-year period, two or more single-family dwellings, two-family dwellings, three-family dwellings, or four-family dwellings, or a combination thereof, that are subject to a loan that is in default at the time of purchase or within 1 year after the time of purchase, which loan is secured by a mortgage or deed of trust;
    (b) Fail to make payments under the mortgage or deed of trust as the payments become due, regardless of whether the purchaser is obligated on the loan; and
    (c) Apply, or authorize the application of, rents from such dwellings for the person’s own use.
    (2) A violation of subsection (1) constitutes a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
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Rent/equity skimming may also be illegal in other jurisdictions. See People v. Phelps, 837 P.2d 755 (Colo. 1992), quoting with approval from United States v. Capano, 786 F.2d 122 (3d Cir.1986):
  • "Equity skimming is the practice of diverting revenues generated by mortgaged property in default to purposes other than property maintenance or mortgage payments."

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