Saturday, April 28, 2007

Wheelchair Bound Widow Beats Down Bully Condo Association

A Margate, Florida condominium association, which brought a lawsuit against an 86 year old, wheelchair-bound widow with a failing memory for allowing two caretakers to stay with her in her apartment around the clock, decided to backpeddle when she retained legal counsel to fight back against them. The association has announced its intent to dismiss the case. However, her attorney, Blaine Carneal, has accused the association of violating Normoyle's civil rights and fair housing laws and asked the Florida Attorney General's Office to investigate. Further, he has formally demanded that the association pay him his attorney fee incurred by his client. The condo association is painfully finding out that once you pick on the wrong person, you can't just back away and not expect any repercussions. For the whole story, see Margate condo drops lawsuit against ailing widow who needs live-in help, reported in the South Florida Sun-Sentinel.

Go here for other posts on Widow vs. Condo association.

More Charges Against Minnesota Woman Accused Of Using Stolen I.D.s To Buy Homes

Ida Mae James, of Shakopee, Minnesota, who was accused in January of the identity theft of five people to secretly purchase homes in other people's names, secure mortgages, and then collect sales commissions and rents, is now facing an additional accusation of stealing the I.D. of a sixth person. Additionally, a second defendant has been charged in the scam. Holly Jo Jackson, also of Shakopee, is alleged to have assisted James in pulling off the scam. Reportedly:
  • "A complaint filed Monday alleges that Jackson, a former personal care attendant for disabled persons, assisted James in stealing the identity of a person whom she cared for in 2005. Two properties allegedly were bought in that person's name."

For more, see Case grows against Shakopee woman accused of ID theft, reported in the Star-Tribune.


Three Lawyers Involved In Real Estate Theft, Forgery Scam

Authorities say that three lawyers played key roles in a $14 million mortgage scam that robbed owners of the value of dozens of properties, according to The Daily Telegraph. The scam involved forgery, falsely witnessing signatures, and false documents. Reportedly, title insurance companies ended up getting stiffed since the money lost in the scam was repaid by them. Two lawyers have already confessed and have been jailed. The third is on trial. For more, see Lawyers 'in mortgage loan scam'.

Friday, April 27, 2007

NYC Establishes Foreclosure Prevention Helpline reports:
  • "New York City Comptroller William Thompson, Jr. Thursday launched a Foreclosure Prevention Helpline to assist New Yorkers struggling to overcome burdensome mortgage payments and threatened with foreclosure. Joined by representatives from community and civic groups, Thompson announced the Helpline - at (212) 669-4600."

For more, see Plan unveiled to assist New Yorkers with escalating mortgage payments.


Ohio Mortgage Broker Convicted Of Using I.D.s Of Recently Deceased To Get Loans

The Dayton Daily News reported last week:
  • "Mark D. Musselman, the mortgage broker accused of using the identities of recently dead people to obtain fraudulent mortgages and steal more than $1 million, was convicted of 48 felony counts Friday following a three-week trial."
  • "Musselman ran Phoenix Funding Inc., with offices in Vandalia and his Piqua home."
  • "His former employee Mark Edwards pleaded guilty to 48 felony counts the week before the two were to go on trial. Edwards testified against his former employer."

The scam also involved forging appraisals, loan applications and other documents. The victimized lender was Interfirst Mortgage Lenders of Ann Arbor, Mich., owned by ABN AMRO Mortgage.

For more, see Man guilty of using identities of dead people.


More On California Appraiser Fighting Mortgage Fraud

The Bakersfield Californian reports:
  • "Last week, local appraiser Gary Crabtree told The Californian that he has documented about 20 suspicious local home sale transactions in the last year -- and that the number has since grown to more than 50 as news of his allegations spread. He has referred some of them to the FBI, California Department of Real Estate and California Office of Real Estate Appraisers."

According to Detective Frank Wooldridge, who handles real estate fraud cases and other financial and white-collar crimes for the Bakersfield Police Department, "It is very prevalent and it will become more prevalent. There is real estate and mortgage fraud going on in this town. To say it is not, you are just missing the boat."

For more, see Loan fraud cases rising (Officials confirm that mortgage scams occur in Bakersfield market). Click here for other posts on this story.


Washington State To Have Its First Statewide "Shred-A-Thon"

The Washington State Office of the Attorney General, in conjunction with Washington’s Law Enforcement Group Against Identity Theft, better known as LEGIT, have announced Washington’s first statewide shred-a-thon to take place on Saturday, April 28. Events at 29 locations statewide will help raise awareness of identity theft prevention and assist the public in keeping sensitive documents out of the hands of crooks. Reportedly, nine professional shredding companies are offering free shredding at those locations. For more, see:


Missouri Woman Awarded $400,000 For Being Forced Out Of Her Home

A Missouri woman who was, in effect, forced out of her home of over 30 years as a result of her municipality's failure to correct a city sewage system that caused continued and substantial sewage backup into her home, was awarded approximately $400,000 in damages and interest from the City of Oak Grove, Missouri.

Reportedly, her home was subjected to over a dozen incidents of significant sewage backup over at least a twelve year period beginning in 1992 theough at least 2004, with the incidents increasing in frequency over the tail end of the 12 year period. Each time, she reported the incident to Oak Grove officials without receiving any relief from this pattern of flooding from them.

According to the court decision:
  • "During this time, the homeowner began to experience headaches, nausea, bronchitis, and trouble breathing from continuous congestion. Her symptoms began as early as 1999 but became markedly worse in 2001. Her doctor prescribed rounds of antibiotics. In 2003, Collier met with Dr. Kanarak, an allergist, who informed her home was infested with mold and her health complaints likely arose from her exposure to the environmental mold. He recommended that she should move out of her home. Collier was reluctant to leave her home of thirty years; but after she was hospitalized in August 2004, she agreed to leave. The allergist recommended that she leave everything in her home to avoid contaminating another environment and that she would likely need to discard everything in her home. He told her to wear a mask and gloves if she ever went into the house."
In prevailing in her lawsuit against the City of Oak Grove, she was awarded $200,000 on her claim of inverse condemnation, $60,000 in personal injury damages, and over $139,000 in interest.

The homeowner was represented by attorney Bill Carr, Law Offices of William Lewis Carr, Kansas City, Missouri.


Donna Collier v. City of Oak Grove, Missouri (Mo. App. Ct., W.Dist., April 24, 2007) with an assist from

Indiana Man Charged In $1 Million Mortgage Fraud

Jason Keigley of First Place Mortgage in Indianapolis, Indiana was charged in 12 counts of theft and violations of the Indiana Securities Act in connection with an alleged a $1 million mortgage fraud scheme. Charges against Keigley center on deals involving two properties in which he is alleged to have misled sellers and buyers, brokering loans in their names without their knowledge and without a proper license. The office of the Indiana Secretary of State investigated the case. For more, see:

  • Man Arrested in $1M Mortgage Fraud Scheme, reported by WISH-TV Channel 8 - Indianapolis (link no longer available online),
  • Loan broker faces charges tied to $1M in foreclosures, reported by The Indianapolis Star,
  • Click here for Channel 8 Video (link no longer available online).

For story update, see The Indianapolis Star: Ex-broker convicted in loan fraud case (2-20-08).

Indiana Secretary Of State Pursuing Mortgage Broker, Title Agent In Alleged Fraud

The State of Indiana is continuing its attack on mortgage fraud, according to an online story by The Indianapolis Star. This time, it's the Indiana Secretary of State launching an offensve against professionals licensed with the state who allegedly played roles in deals involving improper loan applications. It recently filed an administrative complaint which cited loan broker Extreme Investments of Terre Haute and settlement agent Hoosier Title of Sullivan for their alleged roles in deals that enabled West Indiana investors Rick N. Burnett and Kris J. Sommerville in obtaining $1.4 million in loans on 23 houses.

According to the article, "The complaint marks one of the few actions in which a state agency has tried to clamp down on a ring of companies rather than focus on the mastermind of an illicit real estate deal." No criminal charges have been filed. For more, see New tactic in mortgage fraud war (Secretary of state complaint holds broker, title agent accountable).

Thursday, April 26, 2007

Securities / Mortgage Fraud Suit Filed Against Florida Builder, Bank, Broker

A Broward County, Florida couple have filed a civil lawsuit against homebuilder First Home Builders, their real estate broker, D’Alessandro & Woodyard; their real estate agent, Samir Cabrera, and First Florida Bank, containing allegations of mortgage fraud, securities fraud and breach of contract in connection with an alleged investment scheme involving the construction of three homes in Lee County, Florida, according to a report in The News-Press.

Allegedly, "[t]he prospectus sent to [the couple] by D’Alessandro & Woodyard included language that adds up to securities fraud. For example, it states: “Investors will receive a gross return of 14 percent of the sales price of the home. The 14 percent is contractually agreed upon by the tenant before occupancy.”"

According to the couple's attorney, Gary Poliakoff of Fort Lauderdale-based Becker & Poliakoff, he has been contacted by more than 20 people in similar circumstances and may convert the case into a class action lawsuit to represent others who entered into the same type of investment deals as his client.

Real estate broker Frank D’Alessandro, who writes a real estate column for The News-Press, said he was uanware of any indication of wrongdoing by any of the real estate brokerage employees.

For more, see Dispute in housing deal could lead to class-action lawsuit (Broward couple claim fraud in loans for three First Home properties in Lee).

Massachusetts Governor Calls For Crackdown On Abusive Foreclosure Rescue Schemes

An Associated Press article in the Boston Herald is reporting that:
  • "Governor Deval Patrick, reacting to record numbers of people losing their homes, called today for the criminalization of foreclosure fraud, better tracking of foreclosures, and a public education campaign for would-be homeowners."

  • "Patrick’s crackdown would include legislation to make mortgage fraud a criminal offense and prohibit abusive foreclosure rescue schemes."

For more, see Patrick seeks crackdown on foreclosure fraud, enhanced oversight.


NYC Mortgage Brokerage, Company Officials Face Federal Fraud Charges

A Newsday article appearing online at AM-NewYork reports that federal prosecutors have filed a criminal complaint in Brooklyn Federal court Wednesday charging ten people from Bangladesh in a mortgage fraud scheme that centered on that immigrant community.

According to the allegations in the complaint, no fewer than 13 legitimate mortgage banking companies were defrauded by the mortgage brokerage New Generation Funding. Reportedly, the company:
  • "recruited the straw buyers to purchase properties in the city with false information on mortgage applications. But in late 2005, mortgage lenders became suspicious because of a high default and foreclosure rate involving deals done through New Generation, the complaint stated. Mortgage companies shared their suspicions with the FBI which began the investigation, said federal prosecutors. Those charged in the complaint included officials at New Generation as well as some straw buyers, according to court documents."

For more, see Ten charged in mortgage fraud scheme.


Mortgage Servicing Scam Warning

The Mortgage Lender Implode-O-Meter warns of a predatory mortgage servicing scam whereby a third party comes along and claims to be the new servicer of your mortgage loan. For insight in going about protecting yourself, see Scam Alert: Loan Servicer Takeovers.

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

Wednesday, April 25, 2007

Phones "Ringing Off The Hook" At Ohio Foreclosure Assistance Program reports that at the Ohio Housing Finance Agency, which recently began an emergency foreclosure assistance program for Ohio homeowners:

  • "[T]he phones have barely stopped ringing in the past three weeks. The number of calls doubled to 200 a day after the state launched a first-in-the-nation program April 2 to help homeowners whose once-affordable mortgage payments are now busting family bank accounts."

  • "The Ohio program is designed to help strapped borrowers refinance their mortgages. The Ohio agency has a network of 185 lending partners in the state that will work to offer 30- or 20-year loans with “fixed” rates that won’t change. All borrowers are required to participate in one-on-one financial counseling as part of the Opportunity Loan Refinance Program."

For more, see Ohio tries to fend off foreclosures on home loans.


California Real Estate Appraiser Fights Mortgage Fraud

KGET-TV Channel 17 in Bakersfield, California and The Bakersfield Californian report that local real estate appraiser Gary Crabtree, President of Affiliated Appraisers is conduting his own battle against mortgage fraud by compiling and submitting to the California Department of Real Estate and the FBI documented evidence of suspicious activities in over 30 cases of suspected mortgage fraud, involving inflated appraisals, shaky lending practices, and cash kickbacks to buyers, sellers and real estate agents in Bakersfield. Reportedly, Mr. Crabtree said:
  • "he began tracking the questionable transactions so he wouldn’t use them as comparable properties when doing appraisals"
  • "word is out in local real estate circles that he has provided information to agencies about potential improprieties"
  • "he has lost business as a result and others in the industry have stopped talking to him for fear of being implicated."
For more, see:


Curbs Sought On Pressure For Inflated Appraisals

Appraiser groups have called on federal regulators to come down harder on lenders that pressure appraisers to boost valuations in order to permit overpriced deals to proceed, according to a Baltimore Sun article.

Reportedly, in one poll, 90 percent of the appraisers reported having been the victims of such forms of coercion as nonpayment of fees and outright threats, with many having lost business when they opted not to go along with the plan. For more, see Appraisers seek curbs on lender pressure.

Tuesday, April 24, 2007

Minnesota Contractor Cops Plea In Swindle Of Elderly Couple

The Star Tribune reports that building contractor Richard D. Gurewitz, of Home Update Co., pleaded guilty Monday to swindling an elderly Minneapolis couple out of $789,000 while remodeling their tiny house, which had a market value of $102,000. Authorities say that Gurewitz could account for less than $80,000 in materials and other expenses. The victims lived for the past two years with ripped-out walls, code violations and structural hazards. The husband, 79, suffers from Alzheimer's disease and is now living in a nursing home. The wife passed away in December at age 82. For more, see Contractor pleads guilty to swindling elderly couple in remodel.

Caretaker Caught Stealing Elderly Clients' Home; May Get 8 Years In Jail

An 89 year old Cardiff, California man, partially paralyzed by a stroke, and his 95-year-old wife, who was blind and suffering from dementia, contracted with a network of private home care agencies that matches clients with caretakers for home care assistance. According to an article on (Union Tribune - San Diego):

  • "They expected to find an honest professional to help them with household chores and other nonmedical needs. Instead they got convicted felon Gina Trevino, who stole their house just five months later by tricking the couple into placing the deed in her name."

For more, see Better protection for elderly, retirees sought.


Flipping Deals Running Rampant In Southwest Florida

The News-Press in Fort Myers, Florida reports that "[it] has uncovered almost 70 Southwest Florida home sales in which sellers or government officials say people either were duped or appraisals inflated so people could pad their profits. Sales totaled roughly $45 million and the profits more than $10 million." Some of the deals reportedly "involved a group of business people selling homes among themselves at inflated values."

According to Douglas Molloy, chief assistant U.S. attorney in Fort Myers, "The problem is as bad as I've seen it here. We're planning to send a message that this won't be tolerated here."

For all the details set forth in this investigative report, see Southwest Florida real estate sellers beware (Schemes multiply and they subtract from industry's credibility).

Private Sector Players Pledge Mortgage Bailout Relief

Syndicated columnist Kenneth Harney reports that major mortgage market players are expressing intentions to provide mortgage bailout relief, in an article reported in Realty Times. According to the article:

  • "Freddie Mac told a Senate foreclosure-avoidance summit last Wednesday that it planned to devote $20 billion to help refinance subprime buyers facing unaffordable payment adjustments or foreclosure into fixed rate conventional loans."

  • "Fannie Mae earlier had announced a new refinancing program of yet-undetermined dollar volume to reach out to ailing subprime borrowers with adjustable rates on the rise."

  • "Washington Mutual announced last week that it would refinance up to $2 billion worth of subprime adjustables into 30-year fixed rate loans, and cut one half percentage point off its regular fixed rates to make the deals more affordable."
Citigroup and the Federal Housing Administration have also reportedly chimed in with their intentions to participate in the expected subprime bailout. For more, see Major Mortgage Players Pledge Foreclosure Relief; May Alleviate Fallout.

Monday, April 23, 2007

Foreclosure Rescue A Concern In Arizona

The Arizona Republic warns of foreclosure rescue operators that make rescue offers that "are thinly veiled schemes to take control of a struggling homeowner's house and strip any equity left in it. As the number of people falling behind on their mortgages in metropolitan Phoenix has soared, so too has the number of schemes that cost homeowners their houses." For more, including the stories of two scam victims, and comments from regulators and others, see Scam takes owners' home, equity (Scheme targets owners faced with foreclosure).

Foreclosure Rescue, Sale Leasebacks, Usury, & Substance Over Form

I came across a court case decided (in 1988) by the Court of Appeals for the District of Columbia (D.C.'s high court) that involved the prosecution and conviction of two foreclosure rescue operators for violating a D.C. law then in effect known as the Loan Sharking Act. This law (D.C. Code Ann. § 26-701 (1981)) provided in pertinent part that it was unlawful and illegal to engage in the District of Columbia in the business of loaning money upon which a rate of interest greater than 6 per centum per annum is charged on any security of any kind, direct or collateral, tangible or intangible, without procuring a license.

The principal question in this case was whether the two foreclosure rescue operators (husband and wife), according to the court, "[w]ere actually engaged in the criminal enterprise of making loans in a disguised form at legally impermissible rates and without a license."

The transactions for which the foreclosure rescue operators were prosecuted and convicted were the typical, "sale-leaseback-repurchase option" foreclosure rescue deals. While the transactions (which took place in 1981 and 1982) took the form of actual purchases of people's homes with a contemporaneous leasing back of the premises to the homeowner with an accompanying buyback option, the D.C. trial court disregarded the form of the transactions and, instead, looked to the substance of the transactions and treated the deals as disguised loans, and then applied the then-existing D.C. statute accordingly. The D.C. Court of Appeals subsequently affirmed the convictions.

While the foreclosure rescue operators insisted at their criminal trial that they were not in the business of lending money, the D.C. Court of Appeals listed a number of factors that, in their view, supported the trial judge's determination that the transactions were nothing more than disguised loans. The court's observations follow (bold text is my emphasis):
  • "Each of the homeowners was drawn to the [operators] by advertising which promised the availability of "money to lend" to stop imminent foreclosure"

  • "When the homeowners asked for the loans which they believed that the advertisements were describing, and then posed questions about the form of the transactions, the [operators] couched their answers to these questions in language which confirmed to the [homeowners] that they were receiving the very loans for which they had come"

  • "The [operators] often simply calmed the inquiring homeowners' fears by pretending that it was usual practice, perhaps required by the accountant, to sign instruments transferring title to the homes."

The D.C. Court of Appeals then went on to make these additional observations:

  • "Moreover, if the transactions were in fact sales, as [the operators] contend, they were surely most extraordinary ones. When a homeowner sells his home, which is usually his most valuable possession, one would expect at least some measure of bargaining over the sales price. Here, there was none. In each instance, what the [operators] characterize as the "sales" price bore no relation whatever to the value of the equity. It is absurd to suggest that Mrs. Carroll would knowingly sell her home, in which she had an equity of more than $ 36,500.00, for $ 8,100.00. None of the "sellers" had placed his or her home on the market or expressed the slightest interest in selling it. Each "seller" remained in possession after the purported sale, and [the operators] were indeed depicting their service as one that would enable their clients to "save" their homes from foreclosure. Although the transaction also lacked one of the common characteristics of a loan -- an evaluation of the borrower's credit -- no such investigation was needed because the home itself, which in each case was worth far more than the amount expended by the [operators], served as their security. It was therefore altogether reasonable for the trial judge to find that the depiction of each of these transactions as a sale and lease back was a transparent sham which masked an unlawful loan."

The D.C. Court of Appeals opinion cites cases from a number of states (ie. New York, Oregon, Alaska, Hawaii, Washington State, Tennessee, and California), so if any of these states is your home state, there might be something of interest in this case for you.

In conclusion, the D.C. high court, quoting from a case decided by the New York Court of Appeals (New York's high court), made the following memorable quote (among others) about usury laws:

  • "The purpose of usury laws, from time immemorial, has been to protect desperately poor people from the consequences of their own desperation. Law-making authorities in almost all civilizations have recognized that the crush of financial burdens causes people to agree to almost any conditions of the lender and to consent to even the most improvident loans. Lenders, with the money, have all the leverage; borrowers, in dire need of money, have none."

For the text of the entire D.C. case, see:

Browner v. Dist. of Columbia, 549 A.2d 1107 (D.C. 1988).

For other posts on the issue of usury in the context of a sale leaseback, see:


Sunday, April 22, 2007

Foreclosure Rescue Posts On This Blog

For a list of links to posts on foreclosure rescue on this blog, go to Foreclosure Rescue Posts.

Alaska Mortgage Scammer Cops Plea

The Anchorage Daily News reports that

  • "Kourosh Partow, an accused conspirator in a a seven-member mortgage fraud ring that operated in Anchorage since 2002, pleaded guilty to wire fraud in federal District Court on Friday morning. The six others have already pleaded guilty this year to charges in the criminal case, which involved deceiving mortgage lenders by overstating income or making other false statements on loan applications."
The real estate closings allegedly took place at Alyeska Title Company in Anchorage. For more, see Anchorage man pleads guilty to wire fraud (Mortgage Scam: Partow faces a prison term and as much as a $250,000 fine).

For story update, see Mortgage banker gets more than 2 years in prison (Associated Press - 8-27-07).

Go here for other posts on Anchorage mortgage scam.

Weekend I.D. Theft Blotter

The following identity theft stories this week caught my eye:


ACORN To Kick Off National Foreclosure Prevention Campaign

Ben Hanna at reports that:
  • "As part of a national campaign to address the foreclosure crisis, ACORN members in Denver announced their plans to conduct a large scale outreach program to find homeowners at risk of losing their home due to a predatory loan, and to organize these homeowners to fight back to save their homes and win major policy changes presented in a ten point platform."

Based on what is reported in the article, it appears that ACORN (Association of Community Organizations for Reform Now) community organizers will arm themselves with lists of homeowners in foreclosure or with subprime loans and will go door to door in the neighborhoods most affected by the problem, and involve homeowners in the group's campaign activities.

ACORN will also provide homeowners with information regarding, among other things, how to avoid foreclosure rescue scams.

ACORN has established a toll-free national hotline, 1-866-67ACORN, to take calls from homeowners facing foreclosure or suffering from predatory loans. For borrowers in Colorado, please call the ACORN office at 303-534-1948.

For more, see ACORN fights to stop foreclosure crisis.


Washington Mutual Commits Up To $2 Billion To Help Subprime Customers Avert Foreclosure

Mortgage lender Washington Mutual has announced a commitment to refinance up to $2 billion in its customers' subprime loans at discounted interest rates in an attempt to help customers stabilize their finances and avoid foreclosure.

Under the program, WaMu subprime borrowers who remain current on their existing loans and anticipate pending payment increases may apply for new discounted fixed-rate loans or other mortgage products available to them.

A toll-free number (1-800-881-7099) is available to Washington Mutual customers who would like to inquire about this special program.

They have also joined forces with a number of foreclosure prevention groups, including the NeighborWorks® Center for Foreclosure Solutions and the Homeownership Preservation Foundation, to launch a national effort to avert foreclosures.

For more, see WaMu Commits up to $2 Billion in Assistance to Help Subprime Borrowers.

Consumer Advocacy Group Calls For Slowdown In Foreclosure Process

According to a press release issued by the National Community Reinvestment Coalition ("NCRC"), it is recommending to Federal lawmakers "to pass legislation that provides for 60-to-90 day stays in foreclosure proceedings nationwide to ensure that homeowners situations are properly assessed prior to facing needless and expensive foreclosure actions that strip equity."

The NCRC has been working directly with subprime borrowers helping them work out problem loans with lenders and servicers. They claim, however, that "its loan workouts have turned into fast sprints against law firms involved in the foreclosures."

The NCRC also asserts that "a congressionally-mandated stay would establish uniform and reasonable time periods across all states for loan workouts that often contain multiple lending abuses, not just one or two. He presented to the committee a list of 27 abuses often found in subprime borrowers' loans."

For more, see NCRC Calls For a Congressionally-Mandated Stay To Slow Down 'Foreclosure Mills' Operated By Law Firms Seeking to Profit from Borrowers' Troubled Loans (Repeats Call For FHA Re-financing, Responsible Servicing, National Rescue Fund & Strong Anti-Predatory Lending Law)