Thursday, May 31, 2007

Homes Used As Marijuana Grow Ops A Concern For Some

Realty Times reports today a story from Canada regarding the increased use of single family homes being used as marijuana grow operations . According to the story:

  • "An increasing number of grow ops are being discovered across the country, leaving mortgage lenders and sometimes unsuspecting new homeowners with dangerously contaminated homes. The cultivation of large amounts of marijuana in confined spaces gives rise to safety issues involving mold from excess moisture, as well as contamination from the use of fungicides and insecticides, various solvents and other chemicals used for various purposes."
For more, see National Remediation Strategy Urged for Marijuana Grow Ops.


In addition, the San Francisco Chronicle recently reported a story about the problems landlords face when their tenants turn a rental home into a marijuana "grow room." The story includes the plight faced by one landlord who actually went through this nightmare; the pot-growing tenant actually threatened to sue the landlord -- for mold. For more, see Hard to just say 'no' to marijuana-growing tenants.

Tenants Suffering Fallout From Unwittingly Renting Homes In Foreclosures

It used to be that when a landlord rented to a tenant, it was the landlord who scrutinized the tenant's background to determine if the tenant was a good risk. Now, it seems that the tenant has to scrutinize the landlord (and probably even check the property title for recent activity - recent sales - ie. property flipping, existence of a lis pendens or notice of default indicating a possible foreclosure or government forfeiture action, but even that may not help) to determine if the landlord is a good risk (or is he/she merely skimming the equity in the house by pocketing the rent and security deposit without paying the mortgage).

The St. Petersburg Times is reporting a couple of stories of tenants who have unwittingly moved in and rented homes in the Tampa, Florida area, only to learn that the owner hasn't been making his mortgage payments and, consequently, found themselves as defendants in foreclosure actions.

One family, who moved from The Bronx into a Tampa-area home two months ago, were served with notice on May 19 that the bank seeks to foreclose because the owner is months behind in his mortgage payments.

For another couple, this scenario played out on two consecutive rentals. First, they rented a home from Victor Clavizzao, a loan officer (and reportedly, a felon) whose real estate transactions have been the subject of prior investigative reports in the St. Petersburg Times. When that home went into foreclosure, they moved into a home purportedly managed (and possibly owned) by Billy Womack, whose own real estate activities were the subject of a prior story in The Tampa Tribune. The Womack house had reportedly been recently flipped for more than double the previous price within a six month period, and the mortgage is also reportedly now in default.

For more, see Renters, too, face mortgage fallout (Unwary tenants find themselves caught in a widening web of fraud and foreclosure).

For story update, see Felon changes tune on mortgage fraud (8-23-08; In filings made public this week in U.S. District Court in Tampa, Clavizzao agreed to plead guilty to conspiring to fraudulently obtain nearly $6-million in mortgage loans on the Venetian Isle house and 12 other homes and condos in Pinellas County).

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here.

For more on Victor Clavizzao, see Multi-Flipped St. Pete Home Raises Suspicion.

For more on Billy Womack, Tampa-based Womack Property & Asset Management, and the 12 houses Womack's brother and sister-in-law got stuck holding the bag on (allegedly purchased on Womack's advice), see A Dozen Houses, A Dozen Headaches (The Tampa Tribune). alpha

Landlords' Rent Skim Leaves Tenant Without Home

In Virginia, the Loudoun Times-Mirror reports of a lupus-stricken Leesburg woman who, five months ago, unwittingly moved into and rented a townhome that either was in foreclosure or about to go into foreclosure. That home was just sold last week in a foreclosure sale and now the woman and her son are forced to uproot again. The former landlords, who apparently were content with skimming the equity by pocketing the rent and letting the home be auctioned, reportedly still owe her $4,850 in rent, deposit money and the $500 she said she spent to landscape the property. For more, see Foreclosure costs Leesburg woman her home.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. alpha

$20 Million Scam Dupes The Well-Heeled & Sophisticated

A recent article appearing in the Village Voice's weekly publication, SF Weekly in San Francisco, serves as a reminder that it isn't only the poor, uneducated, and/or financially unsophisticated that are vulverable to scam artists. The educated and financially well-heeled can be just as susceptible to being fleeced, as this story (not a real estate scam) tells. It was an almost $20 million beating that was suffered by a group of investors from the Bay Area of California that included tech executives, physicians, lawyers, and other monied types among those being duped. Not surprisingly, embarrassment was a key factor in keeping the victims from discussing the case in any detail with the columnist for the story. The information for the story was gleaned primarily from court documents, including a criminal indictment and civil lawsuits filed against the alleged scam artists. For more, see Take the Money and Run (Rebecca and Terry Solomon face charges of fleecing almost $20 million from investors, but not even the feds know where the couple is hiding).

Ohio Man Allegedly Steals Parents' House Payments, Home Goes Into Foreclosure

In Ohio, The Sheboygan Press reports that Cleveland man William R. Stingl, 52, was charged with stealing $2,900 given to him by his parents to make mortgage payments on his parents’ property. Stingl allegedly told his parents that he would forward the payments to the bank along with his own portion of the mortgage, but he instead cashed the checks for personal use. His parents found out when they received a foreclosure notice. For more, see Cleveland man charged in theft from parents.

New Hampshire Woman Charged With Stealing Elderly Woman's Home Sale Proceeds

In New Hampshire, The Citizen of Laconia reports that a Belknap County Superior Court grand jury on May 24 returned three Class A felony indictments against Candy L. Latour, 38. Reportedly, Latour was the subject of three indictments. Among other things, the indictments charge Latour with the crime of theft by unauthorized taking of $73,000, which included the proceeds from the sale of the woman's home, the liquidation of the woman's individual retirement account and from her monthly Social Security income. All of the crimes are alleged to have occurred in Moultonborough. For more, see Woman indicted in theft of elder's money.

NY Attorney Pleads Guilty Of Ripping Off Aunt Of Home Sale Proceeds

In New York, the Mid Hudson News reports that attorney Shelly Ann Rivera of East Haven, Connecticut pled guilty in Westchester County Court to grand larceny in the second degree for stealing $550,000 from her aunt. She represented her aunt in a number of real estate and financial matters. In May 2005, Rivera received a check for approximately $480,000 from her aunt as the proceeds of the sale of a house in the Riverdale section of the Bronx. In August of 2006, Rivera received another check for $522,248 which was a portion of the proceeds for the sale of another house in Warwick in Orange County. Rivera held the money in trust to be used in a subsequent real estate transaction. On October 9, 2006 she failed to provide her aunt with $860,000 needed by her to purchase a new property in Riverdale, New York. For more, see Attorney pleads guilty to defrauding her aunt of cash.

Disbarred Florida Lawyer Accused Of Stealing From Trust Accounts

In Florida, The Pensacola News Journal reports that disbarred Pensacola attorney Vincent J. Whibbs Jr. faces more possible prison time with a racketeering charge added to three previous felony fraud and theft charges. The additional charge of racketeering relates to an allegation that he took $683,827 of clients' money for his personal use from law firm trust accounts while the senior partner at his former firm. Whibbs already faces two charges of grand theft of more than $100,000 and a charge of mortgage fraud. For more, see Whibbs faces fourth charge (Disbarred attorney also is accused of racketeering).

Wednesday, May 30, 2007

Subprime Mortgage Manipulations Being Exposed ran an extensive, detailed story today about the excesses that took place in the subprime mortgage lending market and highlights the escapades that went on at Costa Mesa, California based Secured Funding Corp., a Southern California mortgage originator.

Among the sub-stories contained in the article are:

1) The story of Taher Afghani, who went from making $58,000 a year managing a Target distribution center, to pulling down $120,000 when he joined Secured Funding. "Afghani and other subprime veterans say their job was to reel in borrowers, period. Never mind whether customers needed loans or could manage payments."

2) How "anyone can work for a big lender under the umbrella of a single corporate license. The [California Association of Mortgage Brokers] estimated that a minimum of 600,000 people were peddling loans in the state last year. In other words, the corporation can hire a loan originator right off the street and have them originating loans that day without any education, licensing or individual accountability."

3) The story of Charlyn Cooper, a former Secured Funding underwriter, whose "job was to rein in the salespeople and make sure paperwork was legitimate so Secured Funding could sell its loans upstream. She says Secured Funding unloaded most of the loans on HSBC Holdings Plc's HSBC Finance unit, which has been racked by the subprime blowup. [...] Secured Funding salespeople didn't always appreciate Cooper's scrutiny of loans, she says.

4) The lawsuits from individual borrowers that are piling up around the country against the big lenders in the industry and the prospect that details of "[m]any subprime sales techniques are now spilling out in the lawsuits, advocacy reports and Congressional hearings."

For more, see Subprime Fiasco Exposes Manipulation by Mortgage Brokerages.

Michigan Servicemember Loses Home To Illegal Foreclosure, Says Lawsuit

The Detroit News reports:

  • "When Sgt. James Hurley of the Michigan National Guard returned from the war in Iraq in December 2005, he found someone else living in his home. Hurley's lender had foreclosed on his mortgage while he was serving overseas and put his wife and two children out of the house in Hartford, in western Michigan, according to a complaint filed this month in U.S. District Court in Detroit."

Reportedly, a foreclosure and sale on a mortgage secured by home owned by someone while on active duty in the military is prohibited under the Federal law now known as the Servicemembers' Civil Relief Act. Michigan attorney Matthew R. Cooper, who is representing Hurley in the lawsuit, claims that the foreclosure and sheriff's sale happened even though the lender was notified that Hurley was on active duty in Iraq and that the Hurley's financial situation was as a result of being on active duty.

For more, see Servicemen battle money troubles too (Michigan soldier's loss of home to foreclosure illustrates financial strain of being sent overseas) (no longer available online).

For copy of the civil lawsuit filed in Detroit Federal Court, see Complaint - Hurley vs. Deutsch Bank National Trust, et al.

Go here for other posts on the Servicemembers Civil Relief Act.

Illinois Servicemember Loses Home To Foreclosure

In Illinois, The Beacon News reports of another active duty servicemember losing his home to foreclosure and having his family evicted while he was still serving in Iraq. This time, the servicemember is an Aurora medical doctor, husband and father of six who is caring for wounded soldiers in Iraq, where the Army major serves as a physician. He is scheduled to return to Aurora by the end of June, according to his wife.

Reportedly, troops on active duty are protected from foreclosure only if their financial delinquency is the result of their military service. In this case, the doctor's failure to pay his mortgage started before the Army sent him overseas and, consequently, is not entitled to the protection afforded by the Federal law now known as the Servicemembers' Civil Relief Act. For more, see

Go here for other posts on the Servicemembers Civil Relief Act.

$6.5 Million Property Bought At Foreclosure For $2,000

This story may not be about the theft of someone's home equity, but one foreclosure buyer got a "steal" and may be of some interest to foreclosure auction investors. A foreclosing mortgage lender was owed about $17 million, secured by 57 acres of undeveloped land in Sacramento County, California. A public auction was scheduled to commence on February 24, 2004 at 10:00 a.m. An individual, Bruce Palmbaum, showed up at the auction with $10 million in available funds. The property was reportedly worth about $6.5 million, and the foreclosing lender intended to place an opening bid of $6 million. According to the court case:

"The sheriff commenced the sale around 10:00 a.m. (the exact time is the subject of intense dispute) and Palmbaum submitted an opening bid of $2,000. Palmbaum’s bid turned out to be the only bid because [the foreclosing lender's] designated bidders got stuck in traffic (my emphasis) on the morning of February 24 on their way from the Bay Area to Sacramento, arriving at the auction room sometime after 10:00 a.m. After the sheriff’s gavel fell confirming a sale to Palmbaum for $2,000, the late-arriving bidders vociferously objected, demanding that the sale be rescinded. The officer replied that bidding was closed and the property had been sold to Palmbaum."

Subsequent litigation by the foreclosing lender to undo the foreclosure sale was unavailing. The bottom line was that Mr. Palmbaum walked away with 57 acres of land, reportedly worth over $6 million for two grand (I hope the foreclosing lender's attorney had his/her malpractice insurance paid up).


Amalgamated Bank vs. Superior Court, (Cal. App. Ct., 3rd District, April 16, 2007; case available online courtesy of

For a short blurb in The Union on this case, see Business Law Bulletin: The devil is in the details, by California attorney Peter C. Bronson (look for the caption: Third case: The purchase thwarted by heavy traffic).

Tuesday, May 29, 2007

More Surprises For Real Estate Investors To Look Out For

KGW-TV Channel 8 in Portland, Oregon recently ran a story about a novel approach used by a homeowner facing foreclosure in addressing his financial situation. For more, see

1) Man uses pigs to trash own house after foreclosure,
2) watch KGW-TV Channel 8 News Report,
3) Follow up report, Charges possible after pigs rescued from foreclosed home.

For more on foreclosures and family pets, go here, and go here. petsII and foreclosures

The San Francisco Chronicle recently reported a story about the problems landlords face when their tenants turn a rental home into a marijuana "grow room." The story includes the plight faced by one landlord who actually went through this nightmare - the pot-growing tenant actually threatened to sue the landlord -- for mold. For more, see Hard to just say 'no' to marijuana-growing tenants. pot grow ops alpha

Commentary On Ex-Subprime Loan Originators Eyeing Move To Reverse Mortgage Market

For one reverse mortgage blogger's commentary on the recent Reuters' story Ex-subprime loan officers eye booming senior market, about former subprime mortgage loan officers gravitating to the reverse mortgage market, see Subprime brokers rushing out of the soup lines! (Out of work mortgage brokers flock to reverse mortgages).

For a BusinessWeek blogger's thoughts, see The mortgage mess of ... 2012.

Go here for other posts on reverse mortgage problems.

Go here , go here , and go here for other posts on elder financial abuse. zeta zebra elder financial abuse

NY Lawyers Land Legal Fee Of $1 Million In Pro Bono Case

I stumbled across a recent New York Law Journal article (appearing in New York Lawyer) that reports on a case heard by a New York Federal Court where the lawyers representing a group of waiters, busboys and captains who worked in a restaurant in New York's Chinatown successfully challenged an unfair labor practice engaged in by their employer. While the attorneys (Skadden, Arps, Slate, Meagher & Flom and the Urban Justice Center) reportedly took on the case on behalf of their clients on a pro bono basis (ie. no legal fees charged to the restaurant employees), a federal judge nevertheless awarded the employees' attorneys a legal fee of $957,710; with liability for the payment thereof being imposed on the restaurant who engaged in the unfair labor practice.

For a copy of the Federal Court decision, see Heng Chan v. Sung Yue Tung Corp.

I make mention of this case because, in the context of foreclosure rescue litigation, I have no doubt that there are some people who wonder how a financially strapped homeowner, someone who can't afford to make his/her mortgage payments, can possibly be able to afford an attorney to sue a foreclosure rescue operator in order to get his/her home back. The reason that there are a growing number of homeowners bringing lawsuits against foreclosure rescue operators is because their attorneys, like the attorneys who represented the waiters, busboys, and captains in the New York labor law case, are suing for violations of statutes that allow a judge to award a successful plaintiff's attorney a legal fee, and impose the obligation for its payment on the party who violated the law.

Examples of such laws are:

1) The Federal Truth In Lending Act (see, for example, Moore vs. Cycon Enterprises, where a Michigan Federal Court ruled that a foreclosure rescue operator violated that law in a purported sale leaseback arrangement with a financially strapped homeowner).

2) State consumer protection and/or unfair and deceptive trade practices statutes (see, for example, Eicher v. Mid America Financial Investment Corp., where the Nebraska Supreme Court affirmed an attorney fee award of $378,000 to the lawyers representing a group of foreclosure rescue victims, and imposed the obligation for its payment on the foreclosure rescue operator, who was found to have violated the Nebraska Consumer Protection Act).

3) In addition, there is at least one state that allows for a similar award of attorney fees by a court for violation of the state usury laws involving consumer loans and credit sales (see, for example, Smith v. Eisen, where an Arkansas appellate court ruled that a homeowner was entitled to an award of her attorney's fees to be paid by a pawn shop owner; in this case, the court found that a sale of a home with a contemporaneously executed buyback arrangement between the homeowner and a local pawn shop owner was nothing more than a usurious loan secured by an equitable mortgage).

I am also compelled to mention one other case reported on this blog in the past. In this case, the Washington, D.C. law firm Hogan and Hartson LLP obtained a substantial jury verdict, including $3.3 million in punitive damages, against a foreclosure rescue operator in the Washington, D.C. metropolitan area for violating the D.C. Consumer Protection Act (see Hogan & Hartson Wins $3.3 Million Verdict in Pre-Foreclosure Scam Case). While the news release does not discuss attorney fee awards (and presumably the D.C. statutes allows for an attorney fee award on top of the damages award), it is not unreasonable to believe that the law firm will, at a bare minimum, share in a part of the $3.3 million punitive damage award. Assume a cut of between 20% and 40%, and you can do the math yourself.

Whether you are a financially strapped homeowner, an experienced or aspiring foreclosure rescue operator, or an attorney thinking of representing either, I hope the foregoing has given you some insight as to:

1) How foreclosure rescue victims can go about retaining the services of an attorney for the purpose of undoing a foreclosure rescue arrangement and either getting back their homes, or otherwise salvaging the equity in their homes, and

2) who will end up footing the bill for the foreclosure rescue victim's legal fees in a successful litigation.


Go here for other posts referencing Eicher vs. Mid America Financial Investment Corp.

Go here for other posts referencing Smith vs. Eisen.

Go here for other posts referencing Hogan & Hartson. equitable mortgage yak

Monday, May 28, 2007

How Reliable Is The Reported Foreclosure Data?

A recent Los Angeles Times story questions the reliability of published foreclosure data that is commonly referred to by the media and relied on by government officials when attempting to establish policy. For example, strong criticism has been directed toward Realty Trac, an Irvine, California firm that has become perhaps the most widely cited authority in the field. Reportedly, Realty Trac's methodology in counting foreclosures may result in one house being tallied several times as a foreclosure.

The following excerpt reflects, in part, the frustration of some:
  • "This is highly misleading, the company's critics say. A Colorado housing official recently called RealtyTrac's numbers "ridiculous and irresponsible." The Mortgage Bankers Assn. chastised Congress for depending on the company's data. RealtyTrac's competitors are becoming increasingly vocal about what they see as its overstatements but are sometimes arguing among themselves as well."No one is measuring the truth," said Mark Zandi, chief economist for Moody's "This is a problem when formulating policy.""
For more, see Getting a fix on foreclosure data (Some people are losing their homes in this queasy market, that's for sure. But how many? No one agrees).

NYC, Chicago, Cleveland Getting Clobbered By Home Foreclosures

In New York City, The New York Times recently ran a story of the financial problems being faced by some New York City residents in keeping up with their mortgage payments. Reportedly, in 2007, filings of new foreclosure actions have doubled in Queens, Brooklyn and Staten Island, according to one industry tracker. She said that the average number of weekly filings in both Queens and Brooklyn jumped to about 120 in each borough from about 60 a year ago. For more, see Fighting Off Foreclosure.

In Chicago, Crain's Chicago Business reports that "Cook County is on pace to record at least 30,000 and as many as 36,000 foreclosure filings this year, according to Cook County Circuit Court Judge Dorothy Kinnaird, who presides over the Chancery Division, which handles foreclosures." For more, see Foreclosures Still Raging In Chicago Area (Defaults could nearly double in '07 as pain spreads across region).

In Cleveland, a story by WKYC-TV Channel 3 reports on how hard the problem of home foreclosures has been hitting Cleveland and northeast Ohio. Go here to watch the Video - Foreclosure: Growing problem in Northeast Ohio.

Urgent Need For Mortgage Counselors In NYC

Commentary on the DMI Blog reports of the urgent need for cash to build the capacity of foreclosure prevention specialists throughout New York City. The author states:

  • "Each person facing foreclosure represents hours upon hours of intensive intervention. And those in the trenches doing foreclosure prevention work will end up turning away more people than we can help because there simply aren't enough staff people and training supports (Read "dollars") to handle the need. If those struggling to overcome real estate scams and grotesque "exotic" loan terms represent a forest fire, then the fire fighters have been equipped with cups of water to meet the blaze. An estimated 15,000 foreclosure actions will be filed against New York City homeowners this year ..."

For more, see Foreclosure Prevention in NYC: Throw Money at It

Flexibility To Restructure Subprime Mortgages Lacking In Most Cases

The Associated Press reports:
  • "Federal banking regulators are giving lenders more flexibility when they restructure high-interest rate mortgages given to home buyers with poor credit. The effort by the Office of Thrift Supervision and other agencies is aimed at softening the impact of the housing market’s slowdown and bolsters the argument of lawmakers who say mortgage reforms may not be needed."

Reportedly, the efforts of federal regulators are limited, however, by the fact that "lenders independent of federal authority originated more than 50 percent of subprime loans in recent years. Those loans were then often bundled into securities and sold to institutional investors."

In addition, regarding the difficulty in restructuring home mortgages that have been packaged into securities and sold off to institutional investors, Reuters reports:

  • "Little can be done to change the terms of subprime mortgages to prevent foreclosure because of the way loans that were packaged and sold to Wall Street investors, mortgage industry executives said Monday."

Reportedly, the complexities involved in the financing structures that slice up and package different parts of the mortgage loans into bonds sold to investors, make it extremely difficult to restructure the troubled mortgages. Other complications that make restructuring difficult involve income tax issues, REMIC issues, and financial accounting issues.

For more, see:

Competitors Take Pot Shots At B of A's New "No-Fee Plus" Home Loan

Syndicated columnist Kenneth Harney writes:
  • "Call it the "too good to be true" mortgage: Bank of America's new "no-fee plus" home loan program has competitors searching for sleight of hand tricks and gimmicks. But Bank of America says that its new program is for real, and comes with none of the usual grab bag list of origination, processing, title or closing costs."

For more, see A True "No Fee" Mortgage? (reported by Realty Times)

Alabama Feds Gets Gulity Plea In Mortgage Fraud; $9 Million In Losses, Says FBI

(modified 8-17-07)
The Alabama Press-Register reports that real estate investor Darlene Hill, 50, of Mobile, Alabama, pleaded guilty in a Mobile Federal Court to wire fraud in a mortgage fraud scheme that bilked banking institutions and mortgage companies out of mortgage loan proceeds that resulted in a net loss to the lenders of $9 million, after money recovered from foreclosure sales is factored in. The scam involved was the standard "straw buyer" scam were investors with good credit were recruited and paid a fee for signing their name to bogus loan applications. Reportedly, it was unclear whether those people realized that their conduct was criminal. None of them was charged with a crime.

Other participants in the scam were:
  • Mortgage broker Antonio Harrison of Mobile, who has admitted to submitting fraudulent loan applications to Regions Mortgage, loan closer Jocelyn Easter of Mobile, who served as closing agent on most of the fraudulent loans, Kathy Frye of Eight Mile, an office manager at title insurance agency Harris Title, who assisted in the scheme by notarizing signatures of straw buyers even though they did not appear in person for the closings and who also acknowledged that she was was aware that title insurance was not being issued even though funds were allocated for that purpose at the closings.

For more, see Mobilian uses accomplices to bilk mortgage companies.

For copy of indictment, see Indictment - USA vs. Hill, et al.

For story updates, see

California Authorities Charge Bogus Appraiser With 142 Felonies

KFSN-TV Channel 30 in Fresno, California reported last week that Phillip Contreras, 54, is accused of posing as a licensed real estate appraiser and forging his boss' signature on dozens of home appraisals. He's charged with 142 counts of forgery, grand theft, identity theft and doing business without a license. He is currently free on $1,770,000 bond. For more, see Valley Man Faces 140 Felony Charges in Real Estate Fraud Case.

Ohio Feds Get Guilty Verdict Against Title Insurance Agency Owner

In Cincinnati, Ohio, The Enquirer reports that a federal jury has convicted title insurance agent Stephanie Corsmeier, who owned and operated American Security Title Company, on 11 counts of fraud and conspiracy to money launder in connection with a mortgage fraud investigation. Employee Stacey Lester, of Loveland who was also indicted on the same 11 counts, was found not guilty on all 11 counts by the jury. The indictment listed 42 real estate deals involving American Security Title from 2002 to 2004.

The investigation was conducted by a taskforce of federal agencies including the FBI, the IRS and U.S. Postal Service, which began investigating mortgage fraud in the sale of low price homes in the Cincinnati area. Over three dozen individuals have pleaded guilty to charges since the probe began. For more, see Title Company Owner Guilty (Was party to mortgage fraud).

For the 11 count indictment, see Indictment - U.S.A. vs. Corsmeier (drop me a line at and I'll email you the indictment - be sure to put "Indictment - U.S.A. vs. Corsmeier" in the subject line).

Missouri Feds Convict Title Insurance Agent Of Stealing $3 Million+ In Escrow Funds

The St. Louis Post-Dispatch recently ran a story that should serve as a caution to anyone using the services of title agents to handle closing / escrow services in connection with real estate transactions. It tells the story of one Missouri victim who had $50,000 stolen by title insurance agent Norvel Brown who, when added to the thefts from other victims, made off with over $3 million in escrow money that he was entrusted to hold for others. A Missouri Federal judge sentenced him last week to 63 months in prison and 3 years probation. He also has been ordered to pay over $3.2 million in restitution to his victims.

Reportedly, Missouri doesn't restrict what title agents do with escrow money. According to Doug Ommen, the new director of the Missouri Department of Insurance, "What we have seen in the St. Louis area is, the agencies get into a squeeze because of competition. [...] They have been dipping into those funds that do not belong to them, to cover expenses. [...] It's shocking to me that there are no restrictions on the use of those funds."

Missouri insurance regulators also warned recently that some companies that sell title insurance to homeowners have two sets of prices - one for sophisticated buyers and a second for everyone else. For more, see

Colorado Feds Get Indictment In Alleged $4.5 Million Mortgage Fraud

The Rocky Mountain News reports that James S. Taylor, of Aurora, Colorado, has been indicted by a federal grand jury in Denver on 12 counts of bank fraud, fraud by wire, radio or TV, and money laundering. The charges against Taylor, made by the grand jury in February, involves the alleged fraudulent obtaining of over $4.5 million in residential home loans in Aurora, Littleton and Lakewood. According to the indictment, the following lenders were defrauded:
  • First Franklin Financial Long Beach Mortgage Co., Fort Worth Mortgage, First National Bank of Arizona, Accredited Home Loans, Countrywide Home Loans, Express Capital Lending and Fremont Investment & Loan.

For the rest of the story, see Aurora man indicted in real estate fraud.

For indictment details, see Indictment - U.S.A. vs. Taylor.

Sunday, May 27, 2007

Massachusetts AG Lawsuit Revolves Around Use Of "Liar's Loans"

Buried in an Associated Press article making the rounds in various print media outlets is a reference to a lawsuit filed by the Massachusetts Attorney General against real estate broker Roberta Roninson, her brokerage office, Champagne & Associates, and Rachel Noyes, a bartender-turned-mortgage broker for using “unfair and deceptive tactics to target and deceive low-income consumers into committing to mortgages they could not qualify for or afford.” The suit reportedly claims that the women made thousands of dollars in fees for putting together home purchases and financing that were bound to fail.

The general subject of the article focuses on the use of "stated income" mortgage loans (referred to by some as "liar's loans"), and describes how the defendants were reportedly holding "free seminars" that were drawing as many as 40 to 50 people in an effort to recruit home buyers. While the comapnies named in the lawsuit are out of business, Robinson has reportedly opened a new real estate brokerage under the name, Opulent Realty Inc. Noyes, the bartender-turned-mortgage broker, apparently has skipped town, and is now reportedly in Florida.

For more, see Drawn into real estate frenzy, a neighborhood finds loans too good to be true (reported, among other places, in the San Diego Union-Tribune).

California Woman Charged With Stealing Her Mother's Home Equity

In California, the Victorville Daily Press reported recently that Renee Ray, 53, of Victorville, was arrested and charged with forgery, filing a false or forged document and financial elder abuse in connection a scheme where she allegedly forged her mother’s signature to remove her name from the deed to their house in order to refinance the home. As soon as the mother, from Compton, caught on, she notified San Bernardino County District Attorney’s office Real Estate Fraud Unit. Reportedly, Ray is said to have refinanced the home three separate times, eventually raising the amount of the loan to $272,000 without ever telling her mother about the deed or the $145,000 she walked away with, according to officials. Bail for Ray was set at $500,000. For more, see Daughter arrested for forging signature.

Go here , go here , and go here for other posts on elder financial abuse. zeta

California Woman Convicted In Upfront Fee Refinance Scam

In California, Diana Maria Lozano, of Hollister, pleaded no contest on Wednesday to one felony count of obtaining money by false pretenses in a plea bargain with the San Benito County District Attorney's Office. She bilked a local family out of $9,600 and forced them into foreclosure in a home refinance scam. She originally faced additional charges of grand theft by embezzlement and two counts of forgery, which were apparently dropped by prosecutors in the plea agreement.

The mechanics of the scam simply involved Lozano, who held herself out as an employee of a local finance company that she no longer worked for, talking the family into giving her a $2,100 upfront payment to begin payments on a purported refinance, and then to continue to make payments to Lozano of $500 to $1,000 a week. Lozano pocketed the payments and failed to make payments on an existing mortgage, forcing the home into foreclosure. (I guess you can call this scam a form of equity skimming, but without the need to actually take title to the property and "skim" the rent from a subsequently-placed tenant; the money being "skimmed" in this case comes right from the homeowner without him relinquishing title). For more, see Hollister Con Artist Convicted (Hollister Free Lance).

Massachusetts Woman Falls For "Upfront Fee" Foreclosure Rescue

WCVB-TV Channel 5 in Boston recently reported the story of a Lawrence, Massachusetts homeowner facing foreclosure who received fliers in the mail, telling her that a company purportedly called Fresh Start Program, in Tampa, Florida could straighten out her problems. For a $1,200 fee, they would negotiate a new deal with her mortgage company. She paid the fee and got nothing in return (other than a foreclosure notice from her mortgage lender saying she had to come up with $8,000 to keep her home).

Go here to watch WCVB-TV News report (by reporter Amalia Barreda).

For online story, see Woman Falls Victim To 'Mortgage' Program (Resident On Verge Of Losing Home). Mortgage Assistance Solutions

Weekend Identity Theft Blotter

This week's identity theft related stories: