Saturday, March 17, 2007

Congress Considering Clamp Down On Subprime Mortgage Market

The congressional subcommittee having oversight over financial institutions is scheduled later this month to hold a hearing in connection with the current misery in the subprime mortgage lending market, according to an Associated Press article reported by the Florida Association of Realtors on their website. Reportedly, executives from subprime lending firms could be called to testify at future hearings.

In addition, on the Senate side, Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, issued a statement saying that he is “considering a number of options, including legislation” to protect consumers from abusive lending practices and help consumers who have been harmed to maintain their homes, according to the article. To read more, see:

Are FBI Mortgage Fraud Estimates Low?

Yes, by over $3 billion a year, according to Arthur Prieston, chairman of The Prieston Group, a California firm which offers an integrated suite of fraud protection, loss mitigation and insurance services. Another expert says it could even be more than that. In addition, practices such as "shotgunning" are reportedly on the upswing, and there is a belief that some home builders stuck with unsold homes may be next to utilize "straw buyer" scams to better facillitate unloading their inventory. Fraud by loan originators and title closers are also reportedly at unprecedented levels.

To read more, see Fraud: $4 Billion and Rising, reported in Realty Times.

Friday, March 16, 2007

Jury Acquits On Two Charges; Mistrial On Six Others In Peterson Pocono Case

A Pennsylvania jury, reportedly about to come to fisticuffs at one point, acquitted title closing agent Anita Peterson on two charges of lying under oath but ended up deadlocked on six others, including the five mortgage fraud charges of tampering with closing documents and one count of hindering prosecution, according to an article in the Pocono Record. A mistrial was declared as to the six charges and the prosecution promptly announced that it intends to retry Peterson on those counts. A new trial is to be scheduled in May.

To read more, see Jury hung in home fraud trial (Peterson acquitted on 2 charges; retrial set in 6 others)

More On AG McKenna's Settlement With Foreclosure Rescue Operators

For more information on Washington State Attorney General Rob McKenna's settlement agreement with three Washington-based foreclosure rescue operators, see:

Click here for other posts on State of Washington foreclosure rescue settlement.

(corrected 3-22-07)


South Carolina Woman Loses Home To Foreclosure Scam

A South Carolina woman was conned out of $1,000 in fees she paid to a foreclosure rescue consultant she thought was helping her avoid foreclosure, according to a report WLTX-TV Channel 19 in South Carolina. The con artist did nothing for her and the home ultimately sold at a foreclosure sale. For more, see:

Thursday, March 15, 2007

More On The Phil Hill Straw Buyer Flipping Trial

For additional information on the Atlanta, Georgia mortgage fraud trial involving Atlanta area real estate operator Phillip E. Hill, Sr. and others, see:

Click here for prior posts on the Phillip Hill case.


Three Foreclosure Rescue Operators Settle Charges With Washington State AG

(revised 6-8-07)
Washington Attorney General Rob McKenna has announced a settlement reached with three foreclosure rescue operators accused of taking advantage of financially distressed homeowners, according to the Press Release issued by the AG's office. They have also announced the filing of civil charges against two other individuals involved in the matter.

Fiscal Dynamics, Inc. and Cumulative LLC, of Tacoma; and Northwest Assets, of Seattle, have agreed pay a total of $290,000 in consumer restitution. Walt Scamehorn, owner of Fiscal Dynamics and Cumulative, and E. Arliss Morgan, owner of Northwest, have also agreed to the terms of the settlement. While agreeing to make the settlement, all those charged have denied wrongdoing.

The operators were charged, in a civil lawsuit filed by the AG in December, with unfair or deceptive acts or practices involving "overage plays" (attempts to scam homeowners out of the surplus money, or "overage" that results when the proceeds of a foreclosure sale exceeds the amount owed to the foreclosing mortgagee), "partial interest trusts", and abuses and omissions when undertaking to act as a fiduciary. In addition, they were also accused of colluding to manipulate sale prices at a public auction and deceptive advertising.

Reportedly, more than 100 consumers may be entitled to receive restitution.

The new charges filed by the AG's office are against Joseph Kaiser, of Tacoma, and Tina Worthey, of Burien.

To read more, see the Washington AG's Press Release.

Click here for a copy of the Civil Complaint - State of Washington vs. Fiscal Dynamics, Inc., et al. (Describes in detail the nature of the alleged conduct)

See also Washington Attorney General Sues, Settles with Real Estate Investors for Mortgage Foreclosure "Rescue" Violations, report on All American Patriots news service.

See also 3 'foreclosure rescue' firms agree to settle, reported by the Seattle Post-Intelligencer.

Thanks to the Washington AG's office for making their civil complaint available online.

Another Minnesota Title Closer Charged In Mortgage Fraud

A continuing federal investigation has resulted in charges against Prior Lake mortgage broker Ronald Joseph, who was indicted this week in Minneapolis Federal Court. He is charged with two counts of mail fraud, one count of wire fraud and one count of money laundering. He is accused of devising a scheme to conceal $2.5 million in payments to himself, real estate buyers and other individuals through approximately 40 transactions, using fraudulent loan applications and settlement statements. The documents reflected inflated sale prices for the properties so that Joseph and others could pocket the difference.

Convicted mortgage closing agent Jill Lehn, also of Prior Lake, closed mortgages for both Joseph and another loan officer, Mario Lewis. Lewis, who received nearly $400,000, recently pleaded guilty to charges of wire fraud and money laundering.

To read more, see Prior Lake broker indicted in fake mortgage deals, reported by the Star Tribune.

See also Two more indicted in mortgage probe (Both suspects worked at LHS in Burnsville) in the Pioneer Press at

(articles no longer available online).

For story update (12/28/07), see Lender gets prison time (First in LHS case took plea) ("The first of four defendants tied to the LHS Mortgage Inc. fraud scandal was sentenced Friday to 4½ years in prison. Mario Lewis, 37, a loan officer at the LHS office in Burnsville, had pleaded guilty to drug charges, wire fraud and money laundering. Judge John Tunheim also ordered Lewis on Friday to pay restitution of $437,000. Lewis pocketed almost that much money from nine properties he bought in the Twin Cities area between 2004 and 2006.").

Wednesday, March 14, 2007

Hill Guilty Of 166 Counts In Straw Buyer Flipping Scam

The verdict in the Atlanta Federal Court flipping trial is now in. Atlanta real estate operator Phillip Hill (aka Phil Hill) has been found guilty by a jury on 166 counts of mortgage fraud. Nine co-defendants have also been found guilty on a number of counts. All but Hill have bonded out and are free pending appeals. Also convicted on charges including conspiracy, loan fraud, mail and wire fraud and money laundering were: Leslie Rector, David Van Mersbergen, Marcus C. Alcindor, Barbara Brown, Fred Farmer, Christine Laudermill, Robert Powers, David Thomas, and Dean Thomas.

To read more, see:

Click here for prior posts on the Phillip Hill case.

(revised 10-19-07)

Group Calls For Swift Strengthening Of Foreclosure Prevention Programs

The Center for American Progress is calling on policymakers to consider swiftly strengthening state and federal programs to stem the rising tide of home foreclosures, according to their report, From Boom to Bust - Helping Families Prepare for the Rise in Subprime Mortgage Foreclosures, that they recently issued. Among other things, the report lists some areas that have some form of mortgage assistance programs. To read more, see:

For free foreclosure prevention and intervention services, see NeighborWorks National Toll Free Hotline (1-888-995-HOPE) or


Connecticut Attorney Sentenced For Stealing From Clients

Former Fairfield, Connecticut attorney John M. Claydon Jr. was sentenced to five years in prison followed by three years special probation and restitution of $733,000 in a Connecticut Federal Court on Monday, accorfding to a story on The Connecticut Post Online. He pleaded guilty in December to one count of bank fraud for cheating clients out of money.

Claydon, prosecuted separately in Connecticut state court as well for cheating other clients, is expected to get another 15 years in prison and be ordered to pay $2.8 million in restitution when he is sentenced for those crimes later this month.

All told, he cheated 36 clients out of at least $3.9 million in real estate transactions in which his victims included individuals cheated out of home sale proceeds, banks, and a title insurance underwriter who had to pay out $720,000 in insurance claims as a result of Claydon's actions.

To read more, see Millions stolen by lawyer.

Click here for stories of other Connecticut attorneys in potential hot water.

Tuesday, March 13, 2007

Ohio Prosecutor Announces Two Arrests In Home Equity Theft Cases

Cuyahoga County Prosecutor Bill Mason has gotten off to a pretty fast start this year with real estate related fraud prosecutions as he announced two more indictments today, running up his totals to at two cases a month this year, involving 98 defendants, according to a story on The Plain Dealer blog, at The charges this year involve fraud cases totaling over $5 million in loans and 47 houses in 14 communities, according to the prosecutor's office.

Today's announcement involves two cases alleging blatant thefts of the victims' homes.

In one case, mortgage people Sammy Quick and Brian Cicerchi were allegedly approached by one victim interested in refinancing her home. They are accused of tricking her out of her title, stealing $56,000 in home equity, and then attempting to evict her.

In another case, Willard Horne Jr. of Norfolk, Virginia is accused of conning an 87-year-old Cleveland woman out of her home and $85,000.

For all the details, see Cuyahoga prosecutor presses predatory lending cases.

Accused Pennsylvania Title Agent Testifies In Her Own Defense

Anita Peterson, a title closing agent and former owner of Mountain Valley Abstract, took the stand in her own defense Monday on the fourth day of her trial where she is accused of intentionally falsifying dollar amounts on sales records, removing other documents from files, and lying about it to a state grand jury, according to a story in the Pocono Record, at To read more, including links to prior stories in this case, see Home-sale title agent defends self in fraud trial.

Three Sentenced In Georgia Mortgage Fraud

Three men involved in a mortgage fraud scam that cost victims over $1 million were sentenced to prison in a Georgia Federal Court yesterday, according to a story in The Augusta Chronicle at

Stacey L. Shefton (48 months and $1.06 million restitution for wire fraud), Michael D. Dunn (51 months and $338,084 restitution for mail fraud), and Willie J. Anderson, Jr. (five years probation and $17,530 restitution for concealing the crimes of others) all avoided more serious prison time. According to an assistant U.S. Attorney familiar with the case, the crimes all occurred before before Congress increased the maximum punishment for mortgage fraud to 20 years in prison. To read more, see Three sentenced in $1.06 million fraud.

Daughter Gets 9 Months In Jail For Stealing $93K From Mother

A Las Vegas, Nevada woman was reportedly sentenced to nine months in jail for stealing $93,000 of her mother's money while her mother was in a New Hampshire nursing home, according to a report at Foster's Online, of Dover, New Hampshire. The money represented the proceeds from the sale of the mother's property. The daughter reportedly paid back the money prior to sentencing. For more, see Daughter sentenced in theft of $93,000 from mother.

Connecticut Lawyer In Trouble For Alleged Theft Of Realty Sale Proceeds

Peter Sivaslian, an ex-Torrington, Connecticut attorney, already facing trouble as a defendant "[i]n criminal and civil cases for allegedly stealing more than $2 million from an elderly client was arraigned Monday for an alleged theft from a second elderly client", according to a report by The Register Citizen, at

Sivaslian is alleged to have diverted $120,000 from his client's (a 90 year old widow) bank account through his own bank account and ultimately into his Oppenheimer & Company investment account. The $120,000 represents part of the sale proceeds from the sale of his client's real estate. It has also been alleged that he may have also used his client's investment account to hide $410,000 in bearer bonds.

In the earlier case, in October 2005, police searched Sivaslian's home and discovered 192 bearer bonds in his den, 163 of which authorities concluded were bought with money from the estate of another elderly client.

In the current case, an Oppenheimer & Company branch manager, being aware of the prior legal trouble Sivaslian was in, alertly contacted the cops when he (Sivaslian) showed up with the second client at Oppenheimer's Torrington branch and attempted to deposit $410,000 in bearer bonds in the second client's account.

For the rest of the details, see Attorney accused of more theft.

Click here for other posts on attorneys in potential hot water.

Monday, March 12, 2007

Voiding Title Transfers In Foreclosure Rescue Transactions

For those involved with the legal issues in dealing with (and attempting to void) title transfers in foreclosure rescue transactions, see:

New York State Home Equity Theft Prevention Act - Contract Requirements

(revised 10-24-07)
For New York investors purchasing residential property in foreclosure, click here for a list of HETPA contract requirements made available by the New York State Association of Realtors. (link no longer available).

Click here for other blog posts on the New York HETPA.

Victim Sweet Talked Out Of Home Equity

An Ohio man was recently arrested and charged by Hamilton County, Ohio authorities with five counts of theft for allegedly using an Internet dating web site to find women he would befriend, sweet-talk, and then steal over $100,000 from them, according to an article in the The Enquirer, at

One unemployed victim was allegedly conned out of the entire $80,000 of her home equity and, further, under the apparent belief that she was participating in legitimate real estate investment activity, was left owning three houses with total monthly house payments of about $10,000.

Reportedly, the FBI was in attendance at a recent court hearing but wouldn't say why. An Ohio county prosecutor familiar with the case suspects possible mortgage fraud (possibly a straw buyer scam?). To read more, see Con man generous, deceitful (Baker used dating Web site to find prey).

Sunday, March 11, 2007

Colorado Neighborhood Recovering From Effects Of Mortgage Fraud

A recent article in the Denver Post at tells the story of the Villas at Cherry Creek, a 100 home community in Aurora, Colorado, that is now recovering from the ill-effects of a "straw buyer", "cash back" mortgage fraud scam conducted by an organized group that resulted in mass foreclosures. The scam began about two years ago and eight people have pleaded guilty to federal crimes.

Next month, on the day five of the group members are scheduled for sentencing, neighborhood residents are planning a victory party to celebrate getting their community back.

To read more, see Villas close on better future.

Ohio Man Gets Six Years In Mortgage Scam

Corey M. Hazel of Columbus, Ohio was sentenced on Thursday to six years in prison for a mortgage scam involving bogus appraisals, phantom home repair bills, and obtaining a home loan on an empty lot where he falsely claimed had a home on it, according to an article reported by The Columbus Dispatch, at To read more, see East Side man sentenced to 6 years in mortgage scam.

More On Predatory Mortgage Servicing

I came across two message forums whose participants apparently have a gripe with one mortgage servicer, Americas Servicing Company, one at, the other at

Go here , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics zebra