Saturday, July 28, 2007

Congress Mulling Changes In Servicemembers' Civil Relief Act ("SCRA")

Stars and Stripes reports:

  • "The SCRA gives broad financial and legal protections to active-duty troops and their families. The legislation was originally written in 1940 but revised in 2003 to put greater emphasis on Guardsmen and reservists who found themselves serving in overseas operations. ... Lawmakers are considering more than a dozen changes to the bill, covering issues such as preventing child custody changes while troops are deployed and allowing troops to suspend their cell phone accounts while they’re overseas."
One change being considered is to impose a delay on a foreclosure of a servicemember’s home until at minimum one year after they return from combat, much longer than the current 90-day wait under the act. For more, see Congress eyes changes to troop protection act (Legal, financial rights of deployed servicemembers being reviewed).

Go here for other posts on the Servicemembers' Civil Relief Act. For financial assistance for Pennsylvania families of deployed servicemembers, see Center gets additional funding to help military families.

Indiana Alleged Flipping Fraud "Right Out Of The Sopranos," Say Investigators

The Indianapolis Star reports:
  • "Marion County prosecutors charged nine Indianapolis landlords with welfare fraud and theft this week, characterizing their operation as a sophisticated criminal enterprise that bilked nearly half a million dollars from the government and possibly millions more from private lenders. Investigators described a scheme involving numerous shell companies and at least nine partners -- a point man and eight "straw buyers" -- who flipped about 100 homes in poor neighborhoods, illegally enrolled them in the federal Section 8 housing program for the needy and let them sink into default."
The pending charges relate to allegations of lying to the government when enrolling in the Section 8 rental subsidy program. No charges have been brought in connection with mortgage fraud. Unclear is if the theft charges against the suspects relate to rent skimming (equity skimming) whereby they allegedly pocketed the HUD-subsidized tenants' rentals without making payments on the existing mortgages, the allegations of stripping of items of value from some of the homes when they became vacant, or the charges of taking of government money under false pretenses.

"It's right out of 'The Sopranos' -- season four, episode seven," said one investigator. A prosecutor commented, "I watched the episode ... and the only difference is the Sopranos burn the places down for the insurance money; in our cases, the houses were stripped " [of copper wiring, appliances and anything else salvageable]. Additional charges have not been ruled out, according to a prosecutor.

Those charged are: Anthony T. Moorman, 42, Kameron A. Beckum, 24, Jason A. Boyd, 36, Lawrence J. Howard Jr., 22, Corey J. Jones, 33, Walter J. Powell, 30, Keith L. Thacker, 35, John White Jr., 21, and John A. Williams Jr., 38. For more, see 9 charged with fraud in housing scheme (Section 8 program was bilked out of $472,624, prosecutors say).

Go here for other posts on this story.

Texas Cops Investigating Equity Skimming Allegations

WCEN-TV Channel 6 in Temple, Texas reports on a company called T.O.P.S. (Take Over Payment Services) which is in the business of acquiring homes from people who can't afford their existing payments, and once the homes are signed over to T.O.P.S., the company then reportedly sells the homes to others in arrangements where the new buyers make monthly payments to T.O.P.S., and it agrees to make payments to the mortgage lender holding the loan on the home.

The way the deals allegedly went down is that the owner-occupants of the homes bought from T.O.P.S. unwittingly made the monthly payments to T.O.P.S. while T.O.P.S. pocketed the cash, letting the mortgage loans go into default. The Better Business Bureau has reportedly received over 100 complaints against T.O.P.S. and the Killeen Police Department is also investigating T.O.P.S. for fraud. NBC 6 News tried to reach the owners, Shonda Fulcher and Bobby Fulcher, numerous times, but they refused an interview, and their building is now empty.

For more, watch the Channel 6 report. To read the online report, see Additional complaints filed against a Killeen business.

For update on this story, see Police still investigating TOPS theft claims (Killeen Daily Herald - 8-10-07).

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

Cash Back Mortgage Fraud Allegations Mount Against Suspended Connecticut Attorney

The New Haven Independent reports:
  • "A judge this week extended a suspension of [New Haven attorney Morris] Olmer's license to practice law, as allegations mount that he worked with a West Haven appraiser to cheat mortgage lenders by inflating values of home sales throughout the region."

The allegations are being made in administrative proceedings by the section of the Connecticut judiciary that handles invetigations and discipline of Connecticut attorneys. The allegations being made are of conduct that is pretty standard in your typical cash back mortgage fraud (ie. inflated purchase prices and appraisals, use of double HUD-1 "technique", use of same appraiser on the six transactions that are being investigated). The allegations came from Mortgage Lending Network, who was the mortgage lender who claims to have been duped into financing all six transactions. Reportedly, local resident Thomas Gallagher, a buyer who Olmer represented in one transaction, also is accused of owning the appraisal firm that performed the allegedly inflated appraisals for all six deals.

In addition to the administrative investigation, the state reportedly disclosed that there is also a criminal case pending against attorney Morris Olmer. For more, see Lawyer Battles Rip-Off Charges.

Two New York Attorneys Charged With Stealing Escrow Funds

The North Country Gazette reports:
  • "Two Nassau County attorneys have been arrested in connection with separate thefts of more than $900,000. Barry Chasky, 54, of Point Lookout, has been charged with second degree grand larceny after allegedly embezzling nearly $900,000 from the escrow accounts of First American Title Insurance Company. In a separate case, Joseph Corrado, 48, of Pleasantville, has also been charged with third degree grand larceny in connection with an alleged theft from the escrow account of a Garden City client who hired the defendant to negotiate a loan refinancing."

Chasky is the owner of Triad Abstract Company, which is an agent of First American Title Insurance Company.

Corrado was hired to negotiate a loan modification for a local homeowner who was in default on his home mortgage. Allegedly, the homeowner gave Corrado a total of $35,000.00 to hold in escrow during the negotiations, who reportedly pocketed the money, doing little more than filing a notice of appeal during the process. To date, Corrado has returned only $4,000, creating a financial loss of $31,000 to the homeowner, according to the story. A foreclosure action resulted in the home being sold at auction.

For more, see Legal Duo Charged With Theft Of Escrow Funds.

See also, Nassau County District Attorney press release - DA Files Charges against Two Lawyers (In separate cases, attorneys accused of stealing more than $900k).

Go here for stories on other alleged escrow agent mishandling of funds. sneaky slick escrow agents alpha

Friday, July 27, 2007

More On Media Investigation Of Alleged Bakersfield Flipping Operation

KBAK-TV Channel 29 in Bakersfield, California has their own coverage of the alleged intra-family home flipping operation involving real estate agent David Crisp, the now defunct real estate company, Crisp & Cole, and company associates. For their report, watch the KBAK-TV report; or to read the online story, see More questions for David Crisp.

Go here for other posts on David Crisp.

86 Year Old Ohio Woman Ripped Off By Foreclosure Rescue Service; Demands Full Refund

WKYC-TV Channel 3 in Cleveland, Ohio reports on Sadie Booker, an 86 year old woman holding down three jobs who was facing foreclosure on a predatory mortgage loan on her home. She paid a $500 upfront fee to Foreclosure Solutions and Mediation and Michael Shafran, a local foreclosure rescue service in Macedonia who reportedly told her they can stop the sheriff's sale. A week before the sale, they sent Sadie a letter informing her that they would be unable to help her. When she asked for a refund, they refused, saying that they get $100 an hour for their time.

Fortunately for Sadie, a member of ACORN stepped in at the last minute and reportedly was able to stop the foreclosure of the predatory mortgage on her home at no cost to her. Feeling energized by the last minute reprieve, she, backed by a gang from ACORN (and presumably a WKYC cameraman trailing behind capturing the events on video), marched over to Shafran's house demanding all of her money back.

To see what happened, watch the WKYC-TV Channel 3 report (no longer available online), or to read the online report, see Homeowners facing foreclosure are targeted again.

For a story of another Ohio foreclosure rescue service, this one being sued for allegedly ripping off homeowners out of an $1,150 upfront fee, see Foreclosure Rescue Service Sued In Cincinnati For Alleged Failure To Provide Promised Services.

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

New Hamphire Woman Gets Go-Ahead In Suit Against Ameriquest

Amherst, New Hampshire resident Rosemary Gilroy, who filed a federal suit against Ameriquest alleging that they engaged in predatory lending practices, received a favorable ruling this past Monday in a Concord Federal Court allowing her to "proceed on her case without an attorney and bring the nation’s largest subprime lender into court, because, if what she alleges is true, it could be in violation of state and federal law," according to the Nashua Telegraph. Reportedly, it is her position that, if eligible for a share of a $325 million predatory lending settlement Ameriquest has entered into with 49 states, that share would average around $250, and she's not interested. For more, see Amherst woman sues lender.

Jury Awards Arizona Couple $1 Million Due To Ameriquest Mortgage Screw-Up

The Arizona Daily Star reports:
  • "A jury has awarded more than $1 million to a now-divorced Tucson couple who lost their home after trying to refinance a mortgage through Ameriquest Mortgage Co. The lender, which also is facing $295 million in restitution payments for predatory lending practices, led homeowners Ronaldo Rodriguez and Jodi Aguirre-Rodriguez to believe they had refinanced the loan for their single-family home in Midvale Park, according to a complaint filed in the suit. But the loan wasn't approved, and the couple didn't learn that until their previous lender, Bank of America, foreclosed on the house, and it was purchased at auction by an investor, according to the complaint."
For more, see Tucsonans awarded $1M in bungled loan.

Thursday, July 26, 2007

Possible House Flipping Operation Subject Of KGET-TV Investigative Report

KGET-TV Channel 17 in Bakersfield, California reports:

  • "Why is the family of real estate agent David Crisp the most named in local mortgage default these days? 17 News has been investigating the story for the better part of six months, and public documents reveal a pattern of home sales between Crisp and members of his family. In the cases we uncovered, some members of the family make huge profits, while some take huge losses, at least on paper. In reality, while the profits are real, it is only the mortgage companies that lose real money."

Reportedly, the common elements in many of these deals described in the KGET report are inflated appraisals, intrafamily sales, 100% financing, and the subsequent filing of notices of default by the mortgage lender. There was at least one case of equity skimming, according to the story, where a family unwittingly moved into and paid rent on one of the homes in the flipping operation, only to have to move out two months later because the home went into foreclosure.

For the damning KGET-TV Channel 17 investigative report, watch Crisp's Kinship Deals (by investigative reporter Kiyoshi Tomono).

To read the online story, see Crisp & kin circulate houses, money between them.

Go here for other posts on this story. alpha

Nine In Indiana Charged In Alleged Equity Skimming Scam

(revised 7-28-07)
WRTV Channel 6 in Indianapolis reports that criminal charges were filed Wednesday against nine men for welfare fraud and theft in an alleged scam that reportedly involved:

  • the use of a charity to get loans to purchase residential property and to get taxpayer-supported rent assistance, and
  • the failure to make the payments on those loans while pocketing the rent received from the Indianapolis Housing Agency on behalf of the tenants, leaving the homes facing foreclosure.
Reportedly, an Indianapolis business known as Millennium Innovations created a charity called American Gift Foundation to buy homes. The nine men with the business bought at least 32 homes between 2002 to 2007, according to the story. Those charged (and the amounts they allegedly scammed from the government) are:

  • "Anthony T. Moorman ($185,964); Keith L. Thacker ($30,866); Lawrence J. Howard Jr. ($4,081); John White Jr. ($41,346); Corey J. Jones ($74,559); Jason Boyd ($100,125); John A. Williams Jr. ($2,533); Walter J. Powell ($17,332); and Kameron Beckum ($15,818)."

The tenants who unwittingly moved into the homes on which the mortgage payments weren't being made are undoubtedly facing eviction when the foreclosure process is completed. For more, see Police: Charity Front For Mortgage Scam.

For The Indianapolis Star report, see 9 charged with fraud in housing scheme (Section 8 program was bilked out of $472,624, prosecutors say).

For posts on other equity skimming scams leaving tenants facing eviction, go here and go here, and go here. alpha

Michigan Couple Loses Home In Equity Stripping Scam

In Royal Oak, Michigan, The Daily Tribune reports that a local couple face eviction from their home as a result of a bank foreclosure on their home.

Reportedly, their trouble started in 2004 when they sought to obtain a $10,300 home equity loan to pay off back taxes. According to the story, they were referred to Hispanic Financial Group, Inc., and its agent, Gustavo Aguilar, in April 2004, who not only paid the outstanding taxes but also slipped a purchase agreement into the paperwork and recorded an affidavit of interest against the property for $82,000. When all the dust settled, the couple say they unknowingly sold their house to the lender's accomplice without receiving a penny from the sale, and the lender walked away with a forged check for $33,000 cashed at LaSalle Bank. (LaSalle Bank subsequently repaid the money to the homeowner.) The accomplice ultimately let the house go into foreclosure and it was acquired by U.S. Bank.

The Edwards family tried to get their house back in Oakland County Circuit Court. They claimed the mortgage was defective because it was obtained through a fraudulent transaction so U.S. Bank wasn't a bona fide purchaser. However, the judge ruled in April there isn't enough evidence to support the homewowners' claims and U.S. Bank is the rightful owner of the property. For more, see Couple faces eviction again (They lack funds to buy back house lost in shady deal).

See story updates:

2 In 3 Say Mortgage Ads Are Full Of Baloney, Says Poll

Realty Times reports:
  • "Two out of three adults believe mortgage pitches are either only slightly credible or not credible at all. More than one in five adults, 22 percent, are convinced mortgage advertising and marketing is not credible at all and that could be putting the industry's reputation at stake, according to a recent poll."

For more, see Most Consumers: Mortgage Pitches Not Credible.

More On Rent-To-Own Real Estate Deals

The Milwaukee Journal Sentinel recently ran a story in which they report:
  • "[S]ome fed-up sellers are turning to rent-to-own, a tactic that all but disappeared from the market when home loans were easier to get. Also called lease-to-own, the arrangement appeals to would-be buyers who are stuck because of the same market dynamics: They want to buy, but their down payment is locked up in their own house that won't sell. Rent-to-own is fraught with pitfalls, say lawyers and real estate brokers. It's harder than it looks to construct a fair contract, and sellers don't always get what they want: an easy, automatic sale."
For more, see Taking a different tactic (Frustrated sellers turning to rent-to-own arrangements).

For reports on Indiana "rent-to-own operator" TotalBiz 247, whose "rent-to-own" and "land contract" deals have been described as "flipping schemes with a delayed closing" and has attracted the attention of the Indiana Attorney General as a result of consumer complaints, see:

For my prior post on another rent-to-own article, see Rent-To-Own, Lease-Purchase Offers Gaining In Popularity (Uh Oh, Here We Go Again!).

Go here for other posts on "rent to own" scams. rent to own lease purchase option scams zebra

Wednesday, July 25, 2007

Sacramento Battling Problems Due To Sharp Rise In Vacant Homes

(updated 7-29-07)
KVOR-TV CBS 13 in Sacramento, California reports:
  • "Hundreds of empty buildings are crowding Sacramento and some of them are attracting crime. The number of vacant building [sic] has more than doubled in Sacramento in the last three years. Many of them are deteriorated and some have become a magnet for criminal activity. [...] The sharp rise in vacant homes is tied to the growing number of foreclosures."

Reportedly, the city is currently monitoring 300 vacant homes and expect that number is on the upswing.

For more, watch the CBS 13 report, Empty Trouble, ; or to read the online report, see Vacant Buildings In Sacramento Attracting Crime.

Rash of vacant homes sparks change to city codes (The Sacramento Bee).

More On Texas Mortgage Fraud / Arson / Insurance Scam

KTRK-TV Channel 13 in Houston reports on the mortgage fraud, arson scam in Spring, Texas that has resulted in criminal charges on the following people:
  • "Michael Macomber (arson, and insurance and credit fraud), Adnan Aqil (arson), Arthur Monroe (engaging in organized criminal activity), Attorney Mark Ariza and his wife Freda Ariza (organized criminal activity), Pamela Anderson (organized criminal activity), and Stephen Branz (making a false statement to obtain credit).
For more, see Several charged in alleged fraud and arson scheme.
Go here for other psots on the mortgage fraud/arson story.

Maryland Foreclosure Rescue, Equity Stripping Class Action Lawsuit Moved To Federal Court

The Baltimore Sun reports this morning:
  • "A class action lawsuit seeking to recover millions of dollars in home equity allegedly bilked from hundreds of distressed homeowners in Maryland, Virginia and Washington was shifted to federal court yesterday, broadening its scope to multiple jurisdictions. [...] The lawsuit alleges violations of federal racketeering and real estate settlement laws and seeks unspecified damages for equity allegedly stolen from homeowners who thought they were being rescued from foreclosure. Under federal law those amounts can be tripled. It also charges the defendants with money laundering to evade taxes. [...] Filed on behalf of three Prince George's County families, the new lawsuit covers everyone who was tricked into conveying the title of their properties, not just those in foreclosure, said Phillip R. Robinson, executive director of Civil Justice. "It's just bigger than what we thought it was initially," he said. "Referrals come in every day. We're just getting inundated with calls." His office received two referrals yesterday alone from the Maryland attorney general's office, he said."
Named in the lawsuit as defendants are Metropolitan Money Store, its resident agent Jennifer McCall, of Beltsville; Joy Jenis Jackson, of Fort Washington, Fordham and Fordham Investment Group Ltd., of Lanham and Kurt Fordham, of Beltsville, RTE Title & Escrow LLC, of Largo; Sussex Title LLC, of Rockville; Diane Linda Jones, of Capitol Heights; Leticia Nicholls, of Takoma Park; Jamie Armand Clark, of Bowie; Alexander Jamil Chaudhry, of Rockville; Valerina Tomlin, of Lanham; Southern Title insurance Corp., of Baltimore; Chicago Title Insurance Company, of Baltimore; and 50 unnamed defendants.

Reportedly, the state, as well as federal agencies, including the FBI and Secret Service, have been investigating Metropolitan Money Store, who appears out of business.

For more, see Federal court gets home-equity suit (Md. case grows into class action seeking recovery of homes swindled from owners). (If link doesn't work, go here.)

Go here for other posts on the Maryland foreclosure rescue class action lawsuit.

Disabled Atlanta Tenant Victim Of Equity Skimming Scam

(revised 7-26-07; 7-31-07; 6-14-07)
A disabled Atlanta, Georgia woman, who dutifully paid her rent on time every month, has received notice that she is about to be evicted from her home because she was unwittingly paying her rent to a landlord who was pocketing the money without paying the mortgage, ultimately resulting in the home being sold in a foreclosure sale, according to a story in the Atlanta Progressive News. Reportedly, she doesn’t know where she’s going to go and is having trouble eating due to the stress of worrying about becoming homeless.

The woman, who receives a Federal rent subsidy under the FHA Section 8 program, notified the Atlanta Housing Authority, who administers the FHA program in locally, but has yet to hear back friom them. Since she was receiving a Federal rent subsidy that typically is paid by the local housing authority directly to the landlord, a portion of the monthly rent the landlord was skimming in this case was coming, albeit indirectly, from the Federal government.

(If the Atlanta Housing Authority can't do anything to help her, one suggestion would be to notify and file a complaint with the local U.S. Attorney's office in Atlanta for investigation of possible fraud that may have been committed by the landlord against the Federal Housing Authority for skimming the rent without applying it to the existing mortgage.)

I don't know if Georgia has a specific statute making equity skimming unlawful, but the Federal has an equity skimming statute that can be found at 12 USC 1709-2.

For more, see AHA Voucher Recipient Faces Eviction due to Foreclosure on Home.
For story updates, see:

For a similar equity skimming scam (involving the pocketing of government subsidized rent payments while allowing the homes to fall into foreclosure) that resulted in criminal charges against the landlords, see Police: Charity Front For Mortgage Scam.

For posts on other equity skimming scams leaving tenants facing eviction, go here and go here, and go here. alpha

Tuesday, July 24, 2007

Bakersfield Man Claims To Be Identity Theft / Mortgage Fraud Victim

(revised 7-25-07; 7-27-07)

KGET-TV News 17 in Bakersfield, California reports:

  • "A Bakersfield man said someone stole his identity and used it to buy a home, and doesn’t know where to turn for help. That home is now on the brink of foreclosure. [...] He swears he never signed a single loan document, but it’s his name on documents qualifying him for a $330,000 loan brokered by Aloha Mortgage of Bakersfield and funded by New Century Mortgage of Los Angeles."

For more, watch the Channel 17 reports, Whose House Is This?; and Whose House Is This? - Part 2.

To read the online reports, see:

Story update, BPD re-opens man's possible identity theft case.

New Hampshire Foreclosure Rescue Statute Finally Signed Into Law

In New Hampshire, The Cabinet Press reports:
  • "Gov. John Lynch today (Tuesday, July 24) signed a law aimed at protecting homeowners from foreclosure rescue scams.This new law aims to protect homeowners from losing their homes to foreclosure rescue scams."
For more, see Lynch signs foreclosure law.
Go here for the New Hampshire Foreclosure Rescue statute (HB 365).

More On Tampa / St. Pete Mortgage Fraud / Home Improvement Scam

WFTS-TV Channel 28 provides the following advisory:

  • "If you feel that you were a victim of the mortgage fraud scheme through Advanced Mortgage Solutions, Consumer Lending Resources or any other company run by Scott Almeida, Frank Giffone or Adrienne White, you can contact the Clearwater office of FDLE and ask for either Ellen Wilcox or Troy Walker. They can be reached at 727-298-2482 or 800-226-7203."

Source: WFTS-TV Channel 28 website.

In this case, the arrests of Scott Almeida, Orson Benn, Adrienne White, Frank Giffone, and Samuel Green for allegedly fraudulently obtaining mortgages in the names of local homeowners solicited for home improvement projects was the result of a three-year joint investigation.

The companies involved in the alleged fraud are mortgage brokerages Advanced Mortgage Solutions and Consumer Lending Resources. Two home improvement companies: Premier Quality Renovations and Florida Beautiful Construction, were also allegedly involved, according to authorities.

Also charged in this matter is Bradford Chase Peck.

In addition to the victimized homeowners, Argent Mortgage was the main financial institution victimized in this case.

Go here for other posts on this story.

Texas Mortgage Fraud Ring Unravels As Home Goes Up In Blazes; Arson Charged

KHOU-TV Channel 11 in Houston, Texas reports that seven people face various charges stemming from a mortgage fraud scam that ended with a home being intentionally set ablaze in Spring, Texas. According to the KHOU-TV reports:
  • "A charred, gutted home on a small street of foreclosed homes in Spring is more than just an empty dwelling – it’s a sign of a disturbing new pattern in mortgage fraud. Harris County arson investigators said finding the cause of the fire at the house was easy. Explosions rocked the 7,000 square foot home Sunday afternoon when the owner was in the Bahamas. The Fire Marshal said there were 25 five-gallon containers of gasoline stashed all over the home that were ignited simultaneously."

  • "A $1.2 million insurance claim was filed after the fire by the owner, Michael Macomber. Investigators said Macomber told them he paid Adnan Aquil $10,000 to destroy it while he was out of town. Macomber had written Aquil a check for $5,000 within three days of the fire. A second payoff between the two happened at a Houston bank, investigators said."

Based on the reports, it appears that Macomber was a straw buyer of the home that he had torched. According to one TV report, all the houses on the block have been foreclosed. Reportedly, Macomber bought the home for double what the previous owner (and alleged participant in the fraud ring), Arthur Monroe paid -- and then received a check from Monroe for $171,000 within 24 hours of closing. Several checks were distributed to other parties accused of fraud.

Macomber reportedly confessed to everything to law enforcement; according to the story, "he was the one left holding the bag when a $500,000 mortgage fraud ring unraveled around him." The torched house appears to be only one of a number of houses involved in the fraud committed by this ring.

In addition to Macomber, the following six others were charged in the scam: Arthur Monroe, Adnan Aquil, Mark Ariza, Freda Ariza, Pamela Anderson, and Stephen Branz. Of the seven people charged in connection with the arson, only Macomber had turned himself in Monday. The others have yet to turn themselves in.

For more:

Watch Lee McGuire's 11 News report.

Watch Alex Sanz's 11 News report.

To read the KHOU-TV Channel 11 online reports, see Mortgage fraud burns homeowners, and Seven indicted in arson fraud scheme.

Senior Citizens, Retirement Funds Victimized By Subprime Lending Mess

(modified 12-6-07)
The South Florida Sun-Sentinel recently reported:
  • "Dozens of South Florida senior citizens have lost millions of dollars of their savings because their brokers bet wrong on risky mortgage-backed securities after promising them a stable investment. Coral Springs lawyer Darren Blum said ... that his firm, Blum & Silver, is representing about 25 investors who had invested $20 million with Brookstreet Securities, a California firm that has brokers in at least a half-dozen South Florida offices. Many investors are planning legal action to recover their losses, and for damages and attorney's fees."

According to Blum, "We've had people in their 80s in here in tears. These people are devastated." For more, see Brokers' wrong bets cost South Florida seniors millions.

Go here for related posts on how investors are being affected by investments tied to subprime mortgages, including how a Florida state-run fund experienced the equivalent of "a run on the bank" when municipal finance managers throughout the state started pulling their cash from the fund.

Go here , go here , and go here for other posts on elder financial abuse. yak state-run elder financial abuse

Bankruptcy Trustee Seeks Subpoenas On Those Involved With Alleged Long Island Realty Agent Straw Buyer Operation

On Long Island, Newsday reports:
  • "Bankruptcy trustee Marc A. Pergament is seeking 32 subpoenas of investors, bankers and mortgage companies involved with Hicksville real estate agent Nayana "Nina" Shah over property deals they made on Long Island. A motion filed Friday in U.S. Bankruptcy Court said Shah, who declared bankruptcy in April, "may have been engaged in a myriad of financial transactions which ultimately may be determined by this Court to have been fraudulent ... " In a story last month, Newsday detailed how five men reported making real estate deals with Shah that ultimately went bad, leaving them with ruined credit, extensive debt or homes in foreclosure. The men documented racking up $3.1 million in mortgage loans."
For more, see Agent probed for real estate fraud.

Go here for other posts on this story.

Monday, July 23, 2007

Central Florida Woman Scheduled For Sentencing On Equity Skimming, Fraud Convictions

The St. Petersburg Times reports that Synthia Ippolito, who along with her now ex-husband, was convicted of equity skimming and fraud in a scam that robbed people of some of their home equity, is scheduled for sentencing today in a state court in Pinellas County, Florida. The ex-husband, Christopher Nickelson, 45, was convicted of the same crimes last year. He got 15 years. For the story that led to their convictions, see:

Refinancing Funds Made Available By Some States To Aid Troubled Subprime Borrowers

The Wall Street Journal reports:
  • "Hoping to slow the quickening pace of home foreclosures, about a half-dozen states are setting up funds to help homeowners with high-risk subprime mortgages refinance to more-affordable loans. The states -- which include Maryland, Massachusetts, New Jersey, New York, Ohio and Pennsylvania -- are expected to invest a total of more than $500 million in the effort."

While state officials concede that it is not a large amount relative to the size of the problem, the hope is that these funds will be enough to keep some vulnerable low and moderate income neighborhoods from sliding into decline. For more, see States Aim to Stem Tide Of Home Foreclosures With Funds for Refinancing.

Whistleblower Suit Accuses Lender Of Defrauding Government Out Of Millions

A whistleblower lawsuit has been bouncing around in a Brooklyn, New York Federal Court since May, 2005 in which four "whistleblowers" accused M & T Mortgage Corp., a subsidiary of M & T Banking Corp., of "knowingly and recklessly present[ing] fraudulent claims for millions of dollars to the United States Department of Housing and Urban Development (HUD) for ... mortgage insurance claims on properties ... after recklessly taking assignments of forged, and therefore, void mortgages thereon, after knowing that the mortgages were forged ..."

Among other accusations in the original lawsuit is the claim that inflated mortgages, for which no funds were actually advanced, were written and forged, and then assigned to banks for the purpose of defrauding HUD.

A recent (July 9, 2007) press release reports on what is apparently an updated development in the case:
  • "The whistle blower suit stems from a case involving more than 50 mortgages owned by M & T on properties in Manhattan and Brooklyn that were fraudulently secured through HUD's 203K program for non-profits. A new admission by M & T's lawyer reveals there are nearly 400 fraudulent mortgages worth a half-billion dollars. Indeed, on Friday night, June 29, 2007, Todd Marcus, the attorney for M & T, admitted in a letter to the court that his client never made him aware of a secretive deal between the bank and HUD, in which HUD agreed to pay off not just these 50 fraudulent mortgages, but an astonishing total of 374 fraudulent mortgages worth some $500 million! Marcus previously represented to the court that M & T had no knowledge of any fraud in the origination of any of these loans. The deal between M & T was reached six years ago, according to a letter dated January 11, 2001. Although his law partner attended the meeting at which the deal was reached, Marcus told the court on Friday that he was not aware of the agreement or even the letter's existence until April of this year!"
The press release quotes the plaintiff's attorney, Peter S. Gordon, as saying "[The] admission to the court by M & T attorney Todd Marcus concerning these 50 fraudulent mortgages, as well as the 324 other ones, not only propels the whistle-blower lawsuit forward, but could also result in a number of criminal indictments."

For more, see:

1) Copy of Federal whistleblower lawsuit - Pugatch, et al. vs. M & T Mortgage Corp.

2) July 9, 2007 Press Release - M & T Bank Subject of Whistle Blower Lawsuit; Bank Accused of Defrauding Government Out of Millions From Forged Mortgages (from or (from PR Newswire).

3) Go here for other posts on whistleblower suits involving alleged fraudulent mortgage lending practices.

Hawaii Homeowner Suing To Get Back Home Lost In Foreclosure Rescue Deal; Reportedly Out $160K In Home Equity

(original post - 7-21-07)

KITV Channel 4 in Honolulu reports:

  • "An Ewa Beach family is the victim of a spreading scam involving foreclosure rescue fraud, according to attorneys with the Legal Aid Society of Hawaii. As more people struggle with rising mortgage payments, attorneys for Legal Aid Society of Hawaii said there are groups promising hope that are actually out to steal homes."
When the homeowner fell behind on the mortgage payments, she reportedly turned to a company called USA Mortgage. What the homeowners thought was a refinance was a below-market sale, with a contemporaneous leaseback of the home requiring rent of hundreds of dollars higher than the old mortgage, and she paid thousands to people associated with Mortgage Alliance, according to the article. For more, see Legal Aid Says Ewa Beach Family Scammed By Mortgage Company (Mortgage Company's Attorney Says Client Did Nothing Wrong).

Go here for other posts on Hawaii foreclosure rescue.

Editorial Note:
Even if there is no fraud, deception, overreaching, etc. committed by the foreclosure rescue operator in this case, the transaction described in the story still smells like an equitable mortgage. If, in fact, a transaction like the one described in the story is treated by a court as an equitable mortgage, the foreclosure rescue operator would only be entitled to a repayment of any amounts advanced, plus interest (subject to any applicable usury statutes), and the homeowner would be entitled to get back the title to the home, subject to the equitable mortgage.

The Hawaii Supreme Court decided the applicability of the equitable mortgage doctrine in the state (or at least I thought they did) over forty years ago (see Kawauchi v. Tabata, 49 Haw. 160, 413 P.2d 221 (1966)).

(In that case, a sale-leaseback arrangement involving a property owner facing foreclosure, where the property selling price was found to be inadequate relative to its true value, and where the financially strapped property owner retained possession of the realty after the transaction, was held to be a secured loan subject to the usury statutes, and not a sale. In so holding, the Hawaii high court observed, "Were we to hold otherwise our usury statute would be emasculated.") equitable mortgage yak

Texas Homeowner Facing Foreclosure Falls For Upfront Fee "Rescue" Offer

(original post - 7-21-07; revised 8-17-07)
KHOU-TV (Channel 11) in Houston, Texas reports on one homeowner facing foreclosure who responded to a postcard in the mail from an entity she thought was an arm of the Federal government, but ultimately turned out to be American Housing Authority — an outfit in California offering hope, claiming it can stop foreclosures. Reportedly, she's out a $948 fee, and she's losing her house anyway.

For more, watch Channel 11 TV report, Foreclosure Rip-Offs (Wendell Edwards reporting).

To read online report, see Don't let foreclosure fears rush decisions.

For a recent post on an "upfront fee" Ohio foreclosure rescue operator currently being sued by financially strapped homeowners, see Foreclosure Rescue Service Sued In Cincinnati For Alleged Failure To Provide Promised Services.

Go here for other posts on American Housing Authority and Brandon Roberts.

Minnesota Feds Investigate Unusual Twin Cities Deals For Possible Mortgage Fraud

The Star Tribune reports:
  • "Federal investigators are probing a renewed rash of potential mortgage fraud in the Twin Cities area in response to reports of a large number of unusual real estate transactions in north Minneapolis and elsewhere. One company being examined has purchased hundreds of properties from southern Anoka County to eastern Dakota County, according to property records."
Reportedly, there is a claim that one company is buying property at one price and flipping it at an inflated price to an affiliated company, with many of the properties lacking any evidence of improvements that would justify the gain in prices. Part of the claim also is that many of the resold properties continue to use the same property manager. Those listed as partners in the company reportedly did not respond to repeated requests for comment. For more, see Mortgage fraud in Cities on FBI radar (Several agencies are scrutinizing fears about property flipping as the North Side reels from foreclosures).

Sunday, July 22, 2007

Old-School S&L Stuck With Toxic Meth Lab In Its Portfolio

The Denver Post reports:

  • "Century Savings [and Loan] is a tiny financial institution, founded in 1903. It sits on [Trinidad, Colorado's] Main Street, a relic of a bygone era when S&Ls took deposits from and made loans to the people in their communities. It has only $86 million in assets and 16 employees. "We are the old-school savings and loan," said [Century's president, Mike] McMillan. "We may not light the world on fire, but we're here and we're steady and we're serving our community.""

This story is about a small frame house in Trinidad, Colorado which once secured a mortgage loan made by Century Savings. A grandmother once lived there with her children and grandchildren until one day when there was a small explosion in the home. As it turns out, Granny was operating a methamphetamine lab. She was eventually arrested and then her house sat vacant and rotting for years. Ultimately, Century Savings foreclosed and got stuck with the house which, as it turns out, was not only completely worthless, but it actually had a "negative value," as the article reports:

  • "The S&L is small enough that any foreclosure stings. But granny's kitchen was so toxic it left the property with a negative value. It might cost $30,000 to $40,000 to demolish and dispose of the contaminated house, leaving a lot worth only $10,000. And forget about the loan."
The article goes on to describe: (a) how easy it is for a home to become toxic as a result of its use as a meth lab, and (b) the nightmares (either for landlords or foreclosing mortgage lenders) of having to deal with a property (which could be a single family home, an apartment on the ground floor of a large aparment building, etc.) which has been used by its occupants to manufacture methamphetamine.

The article reports that "[t]o this day, granny's place remains a hazardous-waste spill."

Go here for some methamphetamine information resources.

For more, see Meth house a lender's nightmare.

Go here and go here for other posts on home based meth labs. meth lab zeta

Never Buy Property At Court Ordered Foreclosure Sales! (Unless You Know What You're Doing)

In Ohio, The Canton Repository recently ran a story of a naive, young couple with absolutely no clue of what they were doing who went to a court ordered foreclosure sale at the Stark County Courthouse and were the winning bidders on a four bedroom Victorian home on four acres of land that they were going to make their home. They celebrated that night by calling a family who wanted to buy their then-current home and signed a contract to sell it to them.

What happened next should serve as a cautionary tale to those thinking about buying a home at a foreclosure sale (not to be confused with an auction of foreclosed homes that mortgage lenders are already stuck with and are trying to unload). The message is that, unless one is prepared to do all the research and legwork that professional foreclosure sale investors do when buying properties at these sales, you should probably think twice about doing it. For the rest of the story, see New home turns into a Catch-22.

Mississippi Man Gets 2 Year Prison Term For "Doing Nothing" In Mortgage Fraud Scam

The Clarion-Ledger reports that Daniel Floyd, of Greenwood, Mississippi who pleaded guilty to failing to alert authorities to a scheme he knew others were involved in to fraudulently obtain mortgage loans of approximately $2.8 million, was sentenced in a Mississippi Federal Court to 24 months in prison and will be placed on one year of supervised release after completing his sentence. For more, see Greenwood man sentenced in mortgage scheme.

To read the official criminal charges, see Information - U.S. vs. Floyd.

For the federal statute (U.S. Code) violated in this case, see Section 4, Title 18 - Misprision of felony.

North Carolina Alleged Cash Back Mortgage Fraud Dupes The Educated & Well Heeled

(revised 8-12-07)
A recent story in The Wall Street Journal serves as another reminder that it isn't only the poor, uneducated and financially unsophisticated that can get sucked into a costly real estate scam.

In the fall of 2002, a real estate developer lured a financially well-to-do crowd to a tent party near an artists' colony tucked in North Carolina's Blue Ridge Mountains where he "talked up a plan he promised could bring big financial payoffs to the isolated community and anyone who invested in it."

For North Carolina real estate developer Tony Porter and his company, company, Peerless Real Estate Services Inc., to get his 2,000-lot residential and retail development project of the ground, the article reports:

  • "[h]e needed investors to launch the project in time to catch the real-estate wave. To help them get in on the action, Mr. Porter promised to arrange loans of as much as $2 million ... [.] Even more enticing, Mr. Porter and documents promoting the project said investors would receive large cash payments -- as much as 10% of the proceeds -- when the loans closed. The investors also were promised they wouldn't have to make down payments with their own money and Mr. Porter or one of his companies would make their monthly mortgage payments for at least a year, according to the documents in a civil suit filed in June by the North Carolina Attorney General against Mr. Porter and more than a dozen associates and related companies. The suits alleges [sic] they used inflated appraisals and phony down payments and performed other misdeeds to cheat investors and mislead the banks."
According to investigators, nearly 200 investors -- mostly well-heeled professionals including real estate lawyers, doctors and Air Force officers -- borrowed more than $100 million from a handful of banks. No crimes have been charged; state and federal agents are reportedly investigating.

It's now been about five years since that tent party, and no houses have been built, loans are in default, and worst of all, "weeds are invading the lawn at the empty sales office."

For more, see 'I Feel Like an Idiot' (Land Project Gone Wrong Shows How Even Well-Off Lured By Go-Go Climate) (May require subscription - if no subscription, try here).

See also, North Carolina Attorney General Press Release - AG Cooper stops $100 million mountain real estate scheme (Developers convinced dozens of consumers to invest in overvalued lots in Mitchell County).

For later articles on this story, see:

Developer's dreams too good to be true (3 ambitious Carolinas projects failed; many say they're owed money). (8-12-07 -The Charlotte Observer) (no longer available online).

Developer Leaves Failed Projects in His Wake (8-12-07 - The Associated Press).

More On Fires & Foreclosures

According to Burr Ridge Suburban Life, a house in Burr Ridge, Illinois bought from a bank for $1.1 million in December, 2006 went up in flames a month later. The homeowners, a husband and wife, left the country for Syria shortly thereafter. Almost six months after being gutted by fire, the spacious three-story house on one of Burr Ridge’s most prominent streets remains boarded up, and the now former owners (the mortgage lender has since foreclosed on the property) are still out of the country. Authorities don't know why they left (and possibly don't know if they are ever coming back) and the DuPage County Arson Task Force has yet to determined the cause of the fire. The village of Burr Ridge is waiting for the bank that now owns the property to grant authorization for demolition. For more, see Village awaits bank’s OK for house demolition.

WZZM-TV Channel 13 in Grand Rapids, Michigan reports that a vacant foreclosed house owned by out-of-town lender Fidelity Bank of Kansas went up in flames at the end of June. After over two weeks after the fire, Fidelity finally boarded up and secured the premises. Neighbors say the house is a hazard and feared neighborhood children would get on to the property. Reportedly, the house sits next to a church and will be torn down eventually, damaging the surounding neighbors' home values in the meantime. No mention if arson is suspected. For more, see After weeks, burned house is boarded for safety.

To see the fire, the aftermath, and the interview with the neighbors, go here to watch WZZM-TV report.

The Columbus Dispatch reports on a fire-ravaged house in foreclosure in Mifflin Township, Ohio that still stands vacant after four years, with grass growing high in the trash-strewn yard and nobody knows what to do with it. Boards over the windows keep falling off, allowing troublemakers to break in. Bank One, now JPMorgan Chase and Co., foreclosed and agreed to buy the property at a sheriff's sale in 2006 but then backed off, court records show (the mortgage lender obviously doesn't want it). The homeowner's attorney sent a letter to the Franklin County, Ohio Board of Health, saying he is physically and financially unable to care for the property (the owner obviously doesn't want it, either).
(Presumably, the real estate taxes aren't being paid on the property, either - but I doubt that the county wants to foreclose; they probably don't want the house, either.)
Reportedly, local officials say the township and county are prevented by state law from demolishing the property. Meanwhile, the house continues to sit, in all its majesty, damaging the surrounding neighbors' home values. For more, see Mifflin Township residents, officials seek fix for fire-damaged house.
For other posts on fires & foreclosures, go here and go here. zebra

Florida Homestead Laws Save Home Of Accused Child Molester

In Port St. Lucie, Florida, TC Palm reports:
  • "The city is dropping its bid to seize the home of a man accused of molesting a 13-year-old boy after learning he has a homestead exemption on the property. An attorney with the city filed paperwork last week to seize Robert Hasty's house, a van and computer equipment it alleges are connected to criminal charges against him. Assistant City Attorney Gabrielle Taylor said Wednesday the city had dropped its efforts to take the house after confirming Hasty does have a homestead exemption on it, something an initial records check did not reveal."

For more, see Port St. Lucie drops plans to seize man's house.