Saturday, September 29, 2007

Dozen Tenants Victimized In Rental Scam

In Charlotte, North Carolina, WCNC-TV reports:
  • Two former employees of a Charlotte real estate firm allegedly stole tens of thousands of dollars from unsuspecting tenants who believed they were paying rent to their landlord. Brian Augustine, owner of Elite Team Realty, said another employee recently discovered a tenant living in a property that was believed to have been vacant. The tenant told the employee he had paid cash and signed a lease with a woman who said she was an agent for Elite Team. Augustine said he later discovered similar agreements with at least 11 other tenants at properties his firm manages in Cabarrus and Mecklenburg counties.

Reportedly, Augustine discovered that the two employees, a collections manager and a leasing agent, were mother and daughter and terminated their employment several weeks ago after uncovering irregularities in lease agreements and payments. For more, see Ex-employees accused of stealing from tenants.

Go here to watch the WCNC-TV report, Tenants fall victim to bogus rentals.

Go here for other posts on tenant victims of rent scams. unwitting tenant rent scam zebra unwitting tenant rent scam zebra

Residents In Limbo After Mobile Home Park Foreclosure

WBAY-TV Channel 2 (Green Bay, Wisconsin) reports on the plight of 125 mobile home residents in a Fox Valley mobile home park that has reportedly been completely neglected and left in bad shape. The owner of the April Aire Mobile Home Park apparently had been skimming the rent it collected from the residents since he hadn't been making his mortgage payments to the mortgage holder, and recently lost his ownership to foreclosure.

Meanwhile, the local town board is considering an ordinance that could target the park and, at a recent meeting, warned that it could be shut down if it's not cleaned up, effectively forcing everyone to move. On top of all this, no one seems to know what impact the foreclosure will have on them. For more, see Grand Chute Warns Trailer Home Park to Clean Up Its Act.

Go here to watch the WBAY-TV Channel 2 video report.

For story updates, see:

Landlords In Foreclosure May Mean Trouble For Tenants

In Chicago, Illinois, the Daily Southtown recently reported on the potential trouble tenants face when their landlord is stiffing the mortgage lender out of its mortgage payments and facing foreclosure. Among the recent problems for tenants in one building in foreclosure were:
  1. failure to fix plumbing problems, maintain the yard or clean up a sewage backup that forced one tenant to flee the building,
  2. worries that the electricity and gas will be shut off,
  3. driving garbage around to the alley for disposal because the path through the back yard is overgrown,
  4. loss of many belongings, including furniture, important documents and personal mementoes after one tenant's apartment was flooded with sewage,
  5. loss of the family cat for one tenant, which had to be taken to a shelter because pets are not allowed in the tenant's new apartment,
  6. one tenant having to boil water to bathe her two children, ages 4 and 9, after the flood of sewage extinguished the pilot lights in the basement,
  7. putting pots under the sink to catch water that leaks from the plumbing and is rotting the floor.

In another case, the tenant did not know the house he had been renting for seven years was under foreclosure until the sheriff's department woke him up one morning in May to evict him, he said. "From that point on, all hell broke loose," the 50-year-old veteran said. "They told me to stand outside, and they started throwing all my things out." The tenant said he was homeless for more than a week after his unexpected eviction and lost nearly everything he owned. "I lost a lot of things that were sentimental, and that really hurt me," he said.

Calls to the tenants organization from renters who are living in foreclosed buildings have snowballed, according to [John Bartlett, executive director of the Chicago-based Metropolitan Tenants Organization]. He said eviction, utility disconnection and recovering security deposits are among their top concerns.

Although Illinois renters whose landlords default on their mortgage payments soon will be protected from eviction under a state law that will give them until the end of their lease or 120 days to find a new home, the new law will not protect them from the above listed possible problems that can arise in foreclosure situations, which are not covered by the new law.

For more, see Tenants stuck when landlord loses property.

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

The new Illinois state law, which goes into effect on January 1, 2008, can be found either at Public Act 95-0262, or at 735 ILCS 5/15‑1701. equity skimming unwittingly delta

Unwitting Tenants Being Left Holding The Bag In Home Foreclosures

Given the high rate of foreclosures in California, The San Jose Mercury News recently ran a story of how these foreclosures are affecting unwitting California tenants who find themselves being required to leave a rented home that they have dutifully paid rent on throughout the period of their occupancy. Some of the highlights from the story:
  1. Nearly 9,500 California properties were sold in foreclosure auctions in August, according to Of those, 44 percent were not owner-occupied, the company said.
  2. [M]any renters don't know the whole story [about the foreclosure of the home they are renting] until they're being informed by a bank's agent that they need to move in 30 days or face eviction.
  3. [One real estate agent] said she has seen cases where landlords rented property to new tenants just before the home's foreclosure auction date, collecting a deposit and rent "knowing that the house would be gone in two weeks," she said. "It's unbelievable what people do, unbelievable."
  4. In most cases, once a property has been foreclosed upon and the ownership changes, tenants' leases are wiped out, and they must vacate within 30 days (60 days if they've lived in the property more than one year).
  5. Tenants in San Jose rent-controlled units would get 90 or 120 days, depending on how tight the rental market is.
  6. Another exception is in rent-controlled units in cities with "just cause" eviction laws that do not list foreclosure as one of the causes for eviction, such as Berkeley, East Palo Alto, Hayward, Oakland and San Francisco (see Some Foreclosing Lenders Conducting Illegal Tenant Evictions In Oakland).
  7. Many tenants don't know that lenders newly in possession of foreclosure properties will typically offer "cash-for-keys" payments of $1,000 or more to tenants who agree to vacate in about two weeks and leave the property clean, said Sean O'Toole, founder of The payments save lenders the time and expense of evictions, and also some cleaning costs. Tenants still have the right to recover their deposits from their former landlords.

For more, see Renters left hanging after foreclosures.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. equity skimming unwittingly delta

Friday, September 28, 2007

Recent Prosecutions Involve $80+ Million In Fraudulently Obtained Loans, Say South Florida Feds

From the office of the U.S. Attorney - Southern District of Florida:

  • United States Attorney [Alexander] Acosta announced several recent mortgage fraud prosecutions, including two cases this week charging 18 individuals in mortgage fraud schemes that resulted in the issuance of more than $50 million in fraudulent loans.
1. United States v. Henry Quintero-Lopez, Lazaro Villalba et. al.

This joint federal-state investigation, spearheaded by the Internal Revenue Service and the Broward County Sheriff’s Office, culminated in a 70-count indictment, unsealed [yesterday], charging 15 defendants in a wide-ranging mortgage fraud scheme. This scheme yielded 12 fraudulent loans, totaling approximately $8,300,000.

Among the named defendants, and their alleged conduct, listed in indictment are:

  • Defendants Henry Quintero-Lopez (aka Henry J. Quintero) and Lazaro Villalba - orchestrated the scheme through which they located properties for sale, offered the owners full asking price, and inflated the contract purchase price submitted to the lender to allow their companies, New World International and D& H Investments of South Florida, to receive as a “fee” moneys in excess of the true purchase price.

  • Defendant Joaquin M. Perea, the owner of J.P. Accounting Service in Miami, Florida provided fraudulent pay stubs, IRS forms W-2 ,verification of employment and verification of deposit forms for the straw buyers involved in this scheme,

  • Defendants, mortgage brokers Antonio Ramos, at Home Mortgage Finance Group in Miami, and Ruben Jimenez, at Lenders Choice Mortgage Services in Miami were provided the bogus documents, who knowingly used the bogus documents to obtain mortgages in the name of the straw buyers,

  • Defendants Eric Garcia (aka Raul Eric Garcia) and Martine Yanisse Castrillon were licensed State of Florida registered trainee appraisers who knowingly prepared fraudulent appraisals at the request of Quintero-Lopez and Villalba,

  • A handful of straw buyers who, according to the indictment, were paid a fee and knowingly participated in the fraud, are also named as defendants. They are: defendants Felipe M. Nunez, Michelle Volcy, Luc Bruna, Maykel Clavero-Gonzalez (aka Maykel Clavero), Iray Ponte, Nidia Rodriguez-Rial (aka Nidia Rodriguez), and Iliana Lima - who were paid thousands of dollars by Quintero-Lopez and Villalba to sign the purchase documents and appear at the closings to have the properties placed in their names.

  • Defendant Dahomey Talavera is listed as the incorporator of corporation D & H Investments of South Florida, Inc.

Among the duped mortgage lenders are Lehman Brothers Bank, FSB, New Century Financial Corporation, Master Financial Incorporated, WMC Mortgage Corporation, and First Franklin Financial Corporation.


2. United States v. Richard Weldon Crowder, II, Gary Mark Mills, and Karen Lynn Sullivan - Go here for Charging Document (Criminal Information)

The United States Attorney filed an Information charging the following defendants with conspiracy to commit bank fraud for their participation in a multi-million dollar mortgage fraud conspiracy:

  • Richard Weldon Crowder, II, a licensed mortgage broker and the former owner of America’s Best Mortgage Services, Inc., located in Coconut Creek, Florida,

  • Gary Mark Mills, a licensed title attorney and the owner of Four Star Title Inc., located in Deerfield Beach, Florida, and

  • Karen Lynn Sullivan, a former loan officer for Wachovia Bank.

In total, the defendants are alleged to have caused the fraudulent purchase of approximately seventeen (17) different luxury condominiums, involving more than $42,000,000 in fraudulently obtained mortgage loans from:

  • Wachovia Bank, Washington Mutual Bank, Chevy Chase Bank, and Colonial Savings FA.

The scheme also involved use of phony documents, false information, straw buyers, etc.


Two other recent prosecutions announced by the U.S. Attorney Acosta:

United States v. Yvette Scott Patterson, et. al.

This investigation resulted in charges against eleven defendants involved in a massive mortgage fraud scheme involving 41 fraudulent loans, totaling over $10,000,000. Although two of the defendants remain fugitives, nine have been convicted. Eight pled guilty and one defendant was convicted at trial and sentenced in June 2007 to 120 months in jail.

United States v. Richard Layfield

Defendant Richard Layfield pled guilty on June 11, 2007 to bank fraud. Layfield, a local real estate developer, is scheduled to be sentenced on October 29, 2007 for obtaining just under $24,000,000 in fraudulent mortgages. Layfield knowingly failed to disclose $17 million in money judghments against him when applying for and obtaining the mortgages from Fremont Investment & Loan.


Go here for the U.S. Attorney Press Release - U.S. Attorney Announces Recent Mortgage Fraud Cases And New federal-State Mortgage Fraud Initiative To Crack Down On Mortgage Fraud Violators.

See also, Statewide crackdown on mortage fraud (Miami Herald - 9-27-07).

North Florida Feds Get Guilty Pleas in Cash Back Mortgage Scam, Involved $17.7 Million In Fraudulently Obtained Mortgages

WJXT-TV Channel 4 in Jacksonville, Florida reports:

  • Two men accused of obtaining about $17.7 million in fraudulent mortgage loans have pleaded guilty to federal charges of conspiracy to commit wire and bank fraud, according to the U.S. Attorney's Office. Justin D. Barker, 31, and Robert W. Hulbert, Jr., 45, both of Jacksonville, could face up to 30 years in prison and a fine of $1 million.


  • Hulbert, as the manager of the Jacksonville branch of Nations Title Agency of Florida, operated as the closing agent for the transactions. At the closings, Hulbert would disburse funds from the lenders, providing the sellers with checks in the amount of the original sales prices, and providing the remainder of the loan funds -- the proceeds of the fraud -- to one or more of the conspirators.

For more, see 2 Plead Guilty To $17.7 Million In Mortgage Fraud.

Utah TV Sports Anchor Pleads Guilty In Mortgage Fraud

In Provo, Utah, the Deseret Morning News reports:

  • A television sports anchor has pleaded guilty to communication fraud Tuesday and agreed to testify against others in what officials are calling a multimillion-dollar fraud and conspiracy ring. Dave Fox, anchor/reporter for Channel 2 news, and Mark Atkin both pleaded guilty Tuesday in 4th District Court, signing a plea agreement in which they admitted that in April and January of 2006, the men signed loan papers to get homes that they said they would live in but never actually intended to. The plan was to buy the homes and turn them around and sell them as quick investments.

  • As part of [a] plea deal, Atkins and Fox ... agreed to testify against other individuals involved much more deeply in the alleged housing conspiracy ring. [...] The ring — which allegedly involves real-estate appraisers, mortgage brokers, title insurance agents, investors and in some cases the homeowners — is working together to defraud mortgage companies out of millions of dollars by artificially and fraudulently inflating the values of the homes, then trying to sell them.

For more, see TV sports anchor pleads guilty, will testify in fraud.

For story update, see KUTV's Fox apologizes for mortgage fraud, will return as sports anchor (10-12-07).

Protesters "Storm" Ocwen Financial In Pouring Rain; Demand Halt In Predatory Practices

In West Palm Beach, Florida, The Palm Beach Post reports:
  • Dozens of people poured out of a big yellow school bus in Wednesday's rain to protest what they said was Ocwen Financial's predatory lending practices. The group, members of ACORN, crowded into the lobby of Ocwen's headquarters, chanting loudly and demanding to talk to the chief executive of one of the country's largest subprime loan servicers. CEO William Erbey had ignored a letter ACORN sent to him in July asking for a meeting, protest organizer Brian Kettenring said.

  • "This is kind of a poke in the eye to get his attention," Kettenring said. "I'm the Michael Moore of foreclosures." ACORN - Association of Community Organizations for Reform Now - wants Ocwen to stop foreclosures and evictions immediately, restructure loans based on borrowers' incomes and ability to pay, and offer to lock in the initial interest rate for the remaining terms of the loan for borrowers who cannot afford monthly payments that are about to reset at much higher interest rates.

For more, see Homeowners, activists insist lender modify mortgages.

Go here to watch WPEC-TV Channel 12's coverage of the protest.

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

National Mortgage Company To Alter "No Closing Costs" Ads

The Arizona Daily Star reports:

  • A national mortgage firm known for its extensive radio advertising campaign has agreed to make changes to its marketing. Lenox Financial Mortgage has agreed not to claim the company can provide loans with "no closing costs" unless it also discloses that not everyone will qualify. An "assurance of discontinuance" signed by company President John Shibley and filed in Maricopa County Superior Court says any future advertising will include disclaimers and other qualifying information.

  • [Arizona] Attorney General Terry Goddard acknowledged that a majority of the company's customers were, in fact, offered mortgages that refinanced existing loans without closing costs. But he said that wasn't the case universally.

Shibley, in his ads, has called the idea of no-fee mortgages "the biggest no-brainer in the history of Earth."

As part of the agreement with the Arizona AG's office, Lenox agreed to foot the $95,000 bill for the cost of the AG's investigation. For more, see Lenox mortgage to alter 'no closing costs' ads.


Go here for other posts on so-called "no cost mortgages." yield spread

Thursday, September 27, 2007

Three Charged In Theft Of Seven Homes From Detroit-Area Seniors

In Detroit, Michigan, The Detroit News reports:
  • Calling them "heartless and cruel", Wayne County officials announced charges against three men accused of swindling three senior citizens out of $600,000 through deed fraud and identity theft.

Charged in the felonies are:

  • Paul Rhodes, 35, of Novi (being sought by cops, faces seven counts of fraud, money laundering and larceny by conversion and faces up to 10 years in prison);
  • Nelson Sumpter, 42, of Pittsfield Township (41 felony counts; including uttering and publishing, forgery, false pretenses over $20,000, identity theft, larceny by conversion and money laundering - can face up to life in prison as habitual offender); and
  • Omar Sumpter, 35, of Sterling Heights ( four counts of identity theft, money laundering, and false pretenses - faces up to 10 years in prison).

The lead prosecutor in the case explained how the swindle worked:

  • "They would claim to be real estate professionals who help homeowners to sell their property to potential investors. They tell the home owners that they need their signature to line up investors. They then copy or scan the signature to grant themselves power of attorney. Then they sell the house and keep the money. The victim not only doesn't receive any money, they also lose their home."

According to the prosecutor, the three victims (all of Detroit) included a 72 year old woman, a 76-year-old woman, and a 66-year-old man who lost five homes in the swindle. For more, see 3 accused of swindling homes from seniors.

See also, Wayne County Prosecutor Press Release (Wayne County Deed Fraud Task Force) - Prosecutor, Register of Deeds, and Wayne County Sheriff Announce New Identity Theft and Deed Fraud Charges.


Last November, a media story from Philadelphia, Pennsylvania reported on similar problems with deed theft in that city. To get the attention of a couple of Pennsylavnia political heavyweights, an investigative reporter at a local television station did a story where she went out and "stole" the homes of Pennsylvania Governor Ed Rendell, Philadelphia Mayor John Street, Pennsylvania Speaker of the House John Perzel using phony deeds. To see the looks on their faces when the investigative reporter showed them she was the new owner of their homes, see Fake Deeds Steal Homes (NBC 10 - Philadelphia).

To read the online story, see Investigators: Homes Stolen With Fake Deeds.

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

Go here for other deed theft posts. deed theft zorro yak elder financial abuse

Nebraska Mortgage Company Claims Charges Of Predatory Lending Practices Unfair

A report by The Associated Press appearing in the Omaha World-Herald reports:
  • An Omaha-based mortgage company plans to fight state allegations of misconduct and will try to keep its state mortgage banking license. [...] On Sept. 14, the state of Nebraska sued Advantage Mortgage Service and its owners, alleging predatory lending practices. State investigators said Advantage's tactics included falsifying closing documents, borrowers' signatures, charging hidden and excessive brokerage fees to borrowers and breaking other state lending and consumer protection laws.

For more, see Omaha-based mortgage company says allegations are unfair and wrong.

For earlier media reports on this story, see:

For related court documents in this case, see:

Maine Benefactor To Return Foreclosed Home Back To Owner

WCSH-TV Channel 6 in Portland, Maine reports on the story of a Fairfield widow with nine children who was facing foreclosure and about to lose her home. According to the story:
  • Local businessman Brent Burger organized a web-based campaign called Nine Days For Nine Children. The website resulted in more than $30 thousand dollars in donated building materials, hundreds of volunteers and monetary donations from as far away as California.

The end result is that Burger bought the home at the foreclosure sale and is now supervising the volunteers renovating the home, which will be given back to the family. The renovations will be completed by Sunday, September 30th. For more, see Volunteers Help Family Of Ten Return Home.

Go here to watch the WCSH-TV Channel 6 video.

For story update, see Family Of Ten Gets A Helping Hand From Neighbors (WCSH-TV Channel 6 - 9-30-07), or go here for Channel 6 video report.

Wisconsin Land Owner Threatened With Foreclosure For Failure To "Put In Her Two Cents"

In Hayward, Wisconsin, the Sawyer County Record reports:
  • Hayward resident Violet Jacobson was rather chagrined recently when she opened a letter from Washburn County treasurer Janet Ullom informing her that unless she paid the two cents balance due on her 2006 real estate taxes by Sept. 30 “plus interest,” the county would foreclose on her five acres near Stone Lake.

  • When I saw the letter, I thought ‘What did I do wrong?’” Mrs. Jacobson said. “I was disgusted. In two years, they could take the land away from me” and put it up for sale.
    It’s ridiculous,” she added with a laugh. “They (county personnel) didn’t look at it. I would spend 41 cents for a stamp to send them two cents.”

For more, see Local landowner threatened with foreclosure -- over two cents.

Foreclosing On Minnesota Farmers A Way To Great Wealth?

On the website of television sports network, ESPN, appears a list of the most hated franchise owners in major league sports. Listed at #12 on the list is the Minnesota Twins baseball team owner Carl Pohlad. The accompanying blurb on Pohlad contains this excerpt:
  • Pohlad started his banking fortune, now valued at $2.6 billion, by foreclosing on the land of Minnesota farmers during the Great Depression.

For more, see (no longer available online) ESPN Page 2 - The owners we love to hate.

Wednesday, September 26, 2007

KCRA 3 Investigation Results In Federal Mortgage Fraud Indictments

A Federal and state mortgage fraud investigation involving four Sacramento-area men who were suspected of falsifying millions of dollars in loan applications so investors could qualify for loans they couldn't afford, and triggered by a KCRA 3 investigation by Investigative Reporter Josh Bernstein, has resulted in a 120 count Federal grand jury indictment of the four men on various charges. According to the KCRA 3 report:

  • In an indictment unsealed Tuesday, a federal grand jury charged James Roy Martin [Jim Martin], 36, Mario Fellini III, 38, Gabriel Richard Viramontes, 44, and Joseph Salvatore Gallo, 34, with bank fraud and conspiracy to launder money, [U.S. Attorney McGregor W.] Scott said. Martin, Fellini and Gallo were also indicted on charges of making false statements in loan applications, and Martin, Fellini and Viramontes were indicted on mail fraud charges, Scott said.
Go here to watch Josh Bernstein's report. To read the KCRA 3 online story, see Four Indicted In Mortgage Fraud Investigation (Charges Follow Extensive KCRA 3 Investigation).

For a copy of the grand jury charges, see Indictment - U.S. v. Martin, et al.

See also, the U.S. Attorney Press Release, and Four indicted in mortgage scheme (Sacramento Bee).

Go here for other posts on this investigation.

Easy Credit Creates Mini Ghost Town In One Section Of NYC & Foreclosure Rescue Scams Throughout City

The New York Times reports:
  • Along the streets of Far Rockaway, many recently built two- and three-family town houses sit waiting for even one family to move in. Some have boarded-up windows, while others have clumps of garbage in driveways that have never seen a car. Desperate developers hoping to cover their bets — and stem their losses — tape up both For Rent and For Sale signs inside windows that face nearly deserted streets. The same blocks were once home to sprawling single-family houses with wraparound porches. But during the superheated real estate market of just a few years ago, longtime residents sold out to developers who rapidly demolished the old to build rows of plain vanilla town houses sold, it seemed, to anyone who could sign a mortgage application. But as the market cooled and credit got tighter, many of the new homes sat empty. On a few blocks, developers have built nothing but plywood walls to hide the weed-choked lots after the old houses were torn down.

In addition, The Times article had this excerpt on the plight of homeowners facing foreclosure who have fallen victim to foreclosure rescue scams:

  • The people who can legitimately help them are already overwhelmed and not looking for new clients. The people who are not legit are looking for them and they treat them nice. That is why people end up signing papers now not even thinking about it.
In the case of one married couple, a friend of the husband’s "offered to help them save the house. Instead, ..., they wound up signing over the deed to him and had the house sold out from under them."

For more, see Risky Loans Help Build Ghost Town of New Homes (if link expired, try here).

Arizona Foreclosure Rescue Operator Files For Chapter 11 Bankruptcy

The Arizona Daily Star reports:

  • As more homeowners end up in foreclosure, one investor in distressed properties has ended up in financial trouble, too. Deed and Note Traders LLC, which has operated a foreclosure rescue service under the name HomeSavers, filed for Chapter 11 bankruptcy Sept. 7.


  • [S]ome investors who provided financing to Deed and Note Traders said the bankruptcy filing might ... have to do with dubious business practices. Previously, under the HomeSavers program, the company offered to buy houses from people on the brink of foreclosure, and allowed sellers to continue to live in the properties through rent-to-own arrangements.

  • Last year, Deed and Note Traders agreed to pay fees and restitution of $400,000 after being sued by the state Attorney General's Office for using deceptive tactics and luring customers into rental deals they couldn't afford [see Arizona AG Press Release]. In the settlement, Deed and Note Traders agreed to stop conducting its rent-to-own foreclosure rescue program and allow customers still living in their homes to repurchase the houses at a discount.

  • One of the company's largest unsecured creditors ... said Deed and Note Traders has also been unfair to investors.


  • Another distressed property buyer, HomeVestors, is getting plenty of calls in Tucson, said Fred Hubbard, a local franchisee of the Dallas, Texas-based firm. The company does not offer rent-to-own deals for its sellers because of the potential for legal complications, Hubbard said. "There's been a lot of abuse in lease-backs," he said.
For more, see HomeSavers' parent files for bankruptcy.

For other stories on Deed and Note Traders, see:

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Another Financially Troubled Homebuilder Stiffs Customers & Subs

WGCL-TV Channel 46 in Atlanta, Georgia reports on the problems some new home buyers in brand new subdivisions developed by Tradewinds builders may face. In the case of one recently married new home buyer couple who just moved into their first home:
  • Just weeks after moving into the house in Clayton County, lien letters started arriving in the mail. [The homeowners'] liens totaled about $22,000 all because the builder had not paid contractors. Court documents show long lists of contractor liens on Tradewinds properties in several Georgia locations.
As new homebuyers, they weren't aware of the need for title insurance and say it was never offered to them. When CBS 46 Investigates tried to reach Tradewinds at their headquarters, they discovered newspapers covering the windows and the doors locked. For more, see CBS46 Investigates: The Broken American Dream.

Go here to watch the WGCL-TV Channel 46 story.

Go here for other stories of builders stiffing subcontractors & customers. contractors stiff subs customers alpha

Final Defendant Sentenced In Central Florida Foreclosure Rescue Scam

The Saint Petersburg Times reports:
  • The judge's message was clear: If Amy Hudd Paukner had stood trial with co-workers charged with running a massive mortgage fraud scheme, she would be in federal prison now like the rest of them. "I think you deserve to go to jail, quite candidly," U.S. District Judge James D. Whittemore said to Paukner on Monday. But Paukner, 36, has chronic multiple sclerosis. So Whittemore sentenced her to time served. Others received sentences ranging from a year and a day to five years.

  • In March, a federal jury convicted five Tampa residents that Paukner worked with for scamming homeowners into selling their homes to avoid foreclosure.

For more, see Of 6 in scam, one goes free (The woman with multiple sclerosis aided in defrauding owners facing foreclosure).

For prior post on this story, see Florida Foreclosure Rescue Operators Found Guilty In Federal Fraud Trial.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Tuesday, September 25, 2007

Congress Considers "Forced Mortgage Modifications" For Homeowners In Bankruptcy; Elimination Of Credit Counseling For Ch. 13 Homeowners In Foreclosure

In a story that may be unpleasant news to some mortgage lenders, mortgage servicing companies, and some foreclosure rescue operators, Inman News reports:
  • Legislation that would allow bankruptcy courts to modify the terms of a homeowner's mortgage loan could save 600,000 homes from foreclosure, the bill's sponsor claims. HR 3609, the Emergency Home Ownership and Mortgage Equity Protection Act of 2007, would repeal a legal provision that prohibits bankruptcy courts from modifying the repayment terms of home mortgages. Bankruptcy courts already have the power to modify payments on other secured debts, including mortgages on other properties. "Responsible lenders who made loans on reasonable terms have nothing to worry about in bankruptcy court, but predatory lenders will end up with the loans they should have made in the first place," said bill sponsor Rep. Brad Miller, D-N.C., in a press release.
For more, see Bill would let bankruptcy courts impose loan mods (Moody's: Subprime servicers modify only 1% of loans).

See also, House bill would let courts alter mortgages (Reuters) or here for same article) (ABC News).

Postscript: Section 5 of the proposed legislation, if passed, would eliminate the credit counseling requirement for homeowners facing foreclosure who have filed Chapter 13 bankruptcy.

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More On Minnesota Builder Subject Of Grand Jury Investigation; Straw Buyer Scam, Equity Skimming Suspected

Another story on Eagan homebuilder Parish Marketing and Development is reported in the Pioneer Press. Among other things, the article reports:
  • Two hundred homes Parish constructed in the south metro are entering foreclosure, drawing the attention of local and federal authorities. The U.S. attorney's office has convened a grand jury to investigate the real estate deals and Parish's role in them. An Apple Valley bank officer and a real estate closer from Elko New Market recently pleaded guilty in U.S. District Court to mail fraud in connection with millions of dollars in mortgage deals under investigation. Their attorneys allege Parish is at the center of the elaborate mortgage scheme now under federal investigation. They link the developer to their clients, who admit bilking lenders and borrowers in that scheme.

  • [Bank officer Ramiz] Saadeh, 30, of Apple Valley, and Kristopher Robbins, 27, of Elko New Market, each pleaded guilty to one count of mail fraud this month. Robbins, a self-employed notary and real estate closer, and Saadeh waived their rights to an indictment and are cooperating "in the investigation and prosecution of other suspects," according to their plea agreements. Saadeh's and Robbins' plea bargain stated that the scam involved 200 homes.

Reportedly, the scam involved, among other things, straw buyers buying multiple homes from homebuilder Parish with fraudulently obtained mortgage loans. Many of the homes reportedly ended up being rented to tenants with options to buy, or sold to buyers under contracts for deed. Payments made by the tenants or contract buyers that were to be applied to the existing mortgages weren't and now the homes have either been foreclosed or currently face foreclosure.

For more, see Mortgage scam threatens 200 homes with foreclosure.

Go here for other posts on Minnesota homebuilder Parish Marketing and Development.

Go here for other posts on "rent to own" scams.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. rent to own lease purchase option scams zebra equity skimming unwittingly epsilon

Foreclosure Rescue Operator Violates State "Rescue" Statute; Court Invokes Equitable Mortgage Doctrine

A Minnesota Federal Court last week ruled that, in a sale leaseback transaction involving the home of a financially strapped homeowner and a foreclosure rescue operator, the rescue operator violated a number of provisions of the Minnesota statute regulating foreclosure rescue transactions, Chapter 325N.

Further, inspite of the fact that the sale leaseback transaction between the foreclosure rescue operator and the financially strapped homeowners did not involve any formal paperwork evidencing the existence of a consumer debt or mortgage , the court ruled that the evidence presented supported a finding that the sale leaseback of the plaintiff's home was an equitable mortgage, rather than a true sale leaseback.

For the longer version of this post, see Federal Court Finds Violations Of State "Foreclosure Rescue" Statutes; Invokes Equitable Mortgage Doctrine In Homeowners' Favor.

For the court's opinion in this case, see Jones vs. Rees-Max, LLC, et al. (Sept. 17, 2007).

Representing the homeowner in the Federal action were attorneys Kristine K. Nogosek and Robert B. Bauer, with the firm Severson Sheldon Dougherty & Molenda, PA., Apple Valley, Minnesota.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.). equitable mortgage yak

Upstate New York Homeowner Stung By Upfront Fee Foreclosure Rescue Scam

In Rochester, New York, WHEC-TV Channel 10 reports:
  • Kristy Farrand's house has been in her family for half a century but when her lender wrongly put her home in foreclosure, she feared she might lose it. She was flooded with letters from companies offering assistance. Desperate, she answered one that promised to help her avoid the loss of her property. She took $1300 out of her 401k to pay the upfront fee. More than a year later, all they've done is put her deeper in debt.

For more, see I-Team 10: Foreclosure chasers (if link expired, try here).

Failure To Read "Junk Mail" Lands One Maryland Homeowner In Foreclosure

The Baltimore Sun reports:
  • John Woodard says the notice from his new mortgage company looked like typical junk mail. But it wasn't. It was a letter telling him that his recently refinanced loan had been sold to another lender. By the time the Rosedale homeowner realized he had been paying the wrong lender, he owed thousands of dollars in late fees and he soon racked up more in lawyer bills from fending off foreclosure. "My mortgage company never notified me to send the checks somewhere else," he said. "I did get something in the mail from the new company, but it looked like an advertisement so I thought it was junk." Woodard's story is a cautionary tale in the age of bankrupt mortgage companies and failing lenders.

For more, including the potential problems homeowners face when mortgage lenders go out of business and (1) loan payments get lost or misdirected or (2) lenders fail to pay your home's real estate taxes and insurance out of your mortgage escrow account, see The mortgage handoff (With lenders struggling and home loans shuffling, it's up to homeowners to keep tabs on their mortgages) (Try here if link expired).

Monday, September 24, 2007

More On Metro Dream Homes

(original post 9-23-07)
Another story came out in The Washington Post on the POS Metro Dream Homes investment program that promised to pay the mortgages of its approximately 900 participants and operates in Maryland, Washington, D.C., and Virginia (and reportedly in some other states). According to the story:
  • Some Dream Homes members are still willing to sign their names to sworn affidavits and to appear en masse at a courthouse to defend their participation. They're not victims, they say.


  • According to members who have contacted [Washington Post columnist Elizabeth Razzi], Dream Homes is not making participants' mortgage payments for September and October. For participants who have three or four or even five properties in the program, that's a whole lot of dough they will have to pay this month to remain current on their debt.
The position of Metropolitan Grapevine, the parent organization, is that participants shouldn't expect the payments to be on time, the way a landlord does. For more, see Neighbors Bear Dream Homes' Risk.

For story update, see Federal Court Denies "Dream Homes" Request To Lift Cease & Desist Order (10-2-07).

Go here for other posts on Metropolitan Grapevine / Metro Dream Homes.

Northern California Prosecutors Get "No Contest" Pleas In Foreclosure Rescue Scam

In Stanislaus County, California, The Modesto Bee reports:
  • Two men who swindled homes from vulnerable families by posing as Christian do-gooders avoided trial and state prison with a plea deal Wednesday, and agreed to make restitution to some victims. Lonni Ashlock, 56, of Waterford and Ronald Buhler, 26, of Riverbank entered no contest pleas to six felony counts and were sentenced to one year in Stanislaus County Jail. They may be eligible for alternate work programs, Judge Hurl Johnson said.

  • The plea bargain negated most of the 50 felony counts they would have faced at a trial scheduled to begin next month. Those counts stemmed from cases involving 12 families.
    A Bee review showed Ashlock and Buhler acquired at least 142 properties from owners facing foreclosure in four counties. They were charged only in Stanislaus County.
  • The men gained the trust of owners about to lose their homes at public auction, sometimes by praying with them, then duped them into signing over deeds, witnesses said at their preliminary hearing last fall. Several continued paying rent but eventually were evicted. Those who say they were victims include an 86-year-old woman with dementia, a 66-year-old schizophrenic, a woman with brain lesions and several other disabled people, according to court documents and testimony.

  • "They took away people's dignity. How are they going to get that back? There is no amount of money," said John "J.J." Martin, one of 28 former clients who sued Ashlock and Buhler. Though the men formally admitted to swindling six families, they agreed in the plea deal to make restitution to 20. Some are among those with active civil lawsuits against Ashlock and Buhler; Martin is not.


  • Of the 20 to receive restitution, 12 no longer live in the homes they lost to the men. The remaining eight were not evicted, but all face foreclosure, attorneys said.


  • Ashlock specifically pleaded no contest to violations of the Home Equity Sales Act, which protects homeowners from deceiving pitches. Buhler pleaded no contest to two identical counts plus four counts of theft by false pretenses.


  • [One victim] said he lost the home his parents had hoped would stay in the family forever. He since has suffered two heart attacks, brought on by stress, he said.

According to an earlier Modesto Bee report, the men and their companies have been named in at least 27 lawsuits in Stanislaus, San Joaquin and Merced counties (see Plea deal for men accused of fraud?).

For more, see 2 plead guilty to swindling homeowners (One year in jail, restitution for 20 families mark deal).

For prior posts on this story, see:

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Queens Brokerage Suspected Of Mortgage Fraud; Faces Administrative Charges

In New York City, The Daily News reports in an I-Team Special Investigation reports on allegations that real estate brokerage 2000 Homes arranged for the purchase by a local woman of a Queens home for $538,000 even though the brokerage knew she had bad credit and "lived on an amalgam of government subsidies". The brokerage also reportedly had the woman sign a blank loan application and listed her as a $9,000-a-month "marketing manager" for a company owned by her loan officer's husband, even though she has no full-time job. The woman is now facing foreclosure. According to the story:
  • [The woman's] mess is increasingly common among vulnerable low-income borrowers, facilitated by questionable brokers like 2000 Homes, a Daily News investigation has found.


  • With an office in Queens Village and 20 licensed brokers, 2000 Homes has been fined $3,900 for violating regulations aimed at curbing aggressive sales tactics, officials say. Next month, the company faces a hearing and possible loss of its real estate broker's license in the 2005 sale of a home in St. Albans, Queens, records show.

For the whole story, including the stories of a couple of others who were allegedly duped by 2000 Homes, see Queens woman victimized in brokers' mortgage scam.

Homeowner Files Suit Against Wachovia, World Savings For Deceptive "Option ARMs"; Seeks Class Action Status

The San Francisco Business Times reports:
  • A lawsuit filed against Wachovia Corp.'s mortgage unit and World Savings Bank in Oakland alleges the bank was less than honest in explaining its option-adjustable-rate mortgages to consumers, according to the Charlotte Business Journal. That "campaign of deceptive conduct and concealment" led customers to lose their homes through foreclosure, contends the suit, which seeks class-action status. It was filed Aug. 30 in federal court in San Jose.


  • The suit claims the bank did not disclose the actual interest rate on its loans, which were often raised "immediately and significantly" after closing. It also says if borrowers made payments at the teaser rate, the principal on the loan would actually increase, which is called negative amortization.

For more, see Wachovia sued over option-ARM mortgages. For a copy of the lawsuit, either:

For another lawsuit, filed in a Charleston, South Carolina Federal Court, involving "Option ARMs," see World Savings, Wachovia Sued Again For TILA Violations; Class Action Status Sought.


For links to media stories of other refinancing homeowners who lost equity in their homes and found themselves in or near foreclosure as a result of these or other types of exotic mortgages, see Subprime Refinancing Leaving Some Homeowners Financially Strapped.

Go here for other posts on homeowners suing lenders to undo subprime / predatory loans. undo mortgage loans TILA alpha

IRS Shows Foreclosed Homeowners How To Dodge Income Tax On "Cancellation Of Debt" Income

Possibly in response to the recent letter sent to them by three U.S senators (see Tax relief urged for families who lose homes- Marketwatch, 9-14-07), the Internal Revenue Service issued an Information Release last week (IR-2007-159, Sept. 17, 2007) announcing a new section of their website intended to get the word out that under current Federal income tax law, "special relief provisions can often reduce or eliminate the tax bite for financially strapped borrowers who lose their homes." According to the IRS:
  • Under the tax law, if the debt wiped out through foreclosure exceeds the value of the property, the difference is normally taxable income. But a special rule allows insolvent borrowers to offset that income to the extent their liabilities exceed their assets.
Of particular note in the IRS Information Release is this caution to foreclosed homeowners:
  • The IRS urges borrowers to check the Form 1099-C carefully. They should notify the lender immediately if any of the information shown on their form is incorrect. Borrowers should pay particular attention to the amount of debt forgiven (Box 2) and the value listed for their home (Box 7).

(Editorial Note: I think the secret is coming out that foreclosing mortgage lenders are really screwing up badly in preparing the Form 1099-C notices that they are issuing to foreclosed homeowners.)

For more on the IRS Information Release, see IR-2007-159 - Special Web Section Unveiled for Homeowners Who Lose Homes; Foreclosure Tax Relief Available to Many.

To go to the new IRS section on their website, go to Questions and Answers on Home Foreclosure and Debt Cancellation.

For related articles on this new information, see:

Go here for other posts on dodging the income tax on a short sale / foreclosure sale (including handy links to IRS forms and publications related to this subject). short sale income tax

Home Equity Investment Program Goes "Belly Up" Leaving 800 Customers On The Hook

In Lancaster County, Pennsylvania, Lancaster Online reports:
  • Creative refinancing contracts devised by a Reading-based mortgage broker have unraveled, leaving 800 customers on the hook for higher payments and possible foreclosure on their homes. Wesley A. Snyder filed for Chapter 7 bankruptcy protection Tuesday for OPFM Inc., which he operated as Personal Financial Management ... and five subsidiaries including Image Masters Inc. OPFM attorney Dexter Case said Wednesday the company worked with Image Masters, its investment subsidiary, to refinance homeowners and invest proceeds.
Arrangements were made where homeowners would refinance their mortgages and give the equity to the mortgage broker promoting the investment program. The money was then to be invested, with the investment income to be applied to the loans to accomplish an early mortgage payoff. Reportedly, the money wasn't invested, according to the attorney for the promoter.

(The investment program sounds a little like the POS Metro Dream Homes / Metropolitan Grapevine investment program based in Laurel, Maryland.)

For more, see Mortgage firm goes bust (Homeowners trying to invest equity get stung) (if link expired, try here).

For story update, see:

Go here and go here for other posts and links to earlier media reports on the Pennsylvania Ponzi scheme involving Wesley Snyder, OPFM, Image Masters.

Sunday, September 23, 2007

Defunct Florida Title Insurance Agency Required Employees To Put In "Chinese Overtime"

The Saint Petersburg Times ran another story on the escrow scandal involving the now-defunct Gulf Coast Escrow and its owners, Cheryl L. Wehlau and her husband, John T. Wehlau. According to the story:
  • Loan closers worked 12-hour days, weeks on end without time off. Processors prepared loan packages, napped on cots, splashed water on their faces, then went back to work to meet the volume of loans. [The Wehlaus] even insisted employees do what they called "Chinese overtime" -- paid not at time-and-a-half, but at half-wage.


  • The Wehlaus had a secret reason for maintaining high productivity at Gulf Coast, according to state investigators: They were stealing millions from escrow accounts under their trust, laundering the cash through shell corporations and spending it on an extravagant lifestyle. The stolen funds were replaced by money coming in for new mortgage loans, investigators said, but if the flow of new money was interrupted, the scheme faced collapse.


  • An audit revealed an escrow account that should have held $9.4-million contained just $1.5-million. More than $7.9-million had vanished. [...] Each was charged with 25 felonies: theft from escrow accounts, grand theft and money laundering.

For more, see Title business boomed, but the cash vanished (Life was hard but lucrative at Gulf Coast, until the owners were charged with stealing millions).

For story update, see Search for title company's millions leads to employee (Much of $7.9-million looted from Gulf Coast Title remains missing) (St. Petersburg Times - 10-11-07).

Go here for other posts on this story.

Go here for other stories involving misappropriated or unaccounted for escrow funds.

Texas Apartment Building Foreclosure Forces Unexpected Tenant Move

Media stories from Arlington, Texas are reporting on a residential apartment building that has been foreclosed on by the mortgage lender and is kicking out all the tenants.

The Fort Worth Star-Telegram reports:

  • Residents at some central Arlington apartments are looking for new homes and answers this week after learning their complex was foreclosed and they must move out by the end of the month. [One tenant] said Thursday that she received a letter from management on Sept. 4 giving her 30 days to move out of the Grey Stoke Apartments on Rogers Street. She said she moved into the complex with her teen-age son three months ago and did not know the apartment was in financial trouble. Other residents ... said they never received a letter and that apartment managers are not giving tenants any information.
CBS11TV (Dallas - Fort Worth) reports:

  • CBS 11 News went to the complex where residents said they were angry, frustrated, and confused. They say they never knew the owner was having financial problems until they got eviction notices. [...] Problems began when property owner Stephen Gould, of New Hampshire, stopped making mortgage payments on the Greystoke Apartments. The complex went into foreclosure and the bank Aurora Loan Service took over and decided all residents must go.
For more, see:

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. unwittingly equity skimming beta

Dream Turning Into Nightmare For One New Homebuyer Couple

In Elk Grove, California, KCRA-TV Channrel 3 (Sacramento) reports:
  • Last May, Jason and Gina Rossow fulfilled their dream of buying their first home in a brand-new subdivision under construction in Elk Grove. "Yeah, we were super excited," said Gina Rossow. But now across the street are weeds. An entire field is empty with just debris. And around the corner there are unfinished homes. The Rossows' dream is slowly creeping toward nightmare. "We're just confused," Jason Rossow said. What's causing confusion, concern, and unwelcome news is a closed sign that's on the Dunmore Homes sales office door. All construction was halted last month, and contractors filed roughly $5 million in liens against Dunmore Homes.
For more, see Homebuilder's Closed Office Worries New Homeowners (Residents: Homebuilder Won't Return Our Calls).

Woman Facing Foreclosure Torches Home; Faces Arson Charge

In Gaines Township, Michigan, The Grand Rapids Press reports:
  • Sheryl Christman allegedly had a plan that would give her what her mortgage company wouldn't -- a way out. Four days shy of losing her 3-year-old home to foreclosure, Christman, 38, allegedly set the $150,000 residence on fire Sept. 1, Kent County sheriff's officials said. Authorities say Christman, who has no prior criminal record, torched the home ... as a way to gain insurance money, but fire investigators immediately were suspicious of a blaze that appeared to have quickly roared out of control.


  • Foreclosure arson is becoming an issue across the state and country, Grand Rapids fire investigator Pablo Martinez said. He recently attended a conference for fire investigators and nearly each person there had probed potential repossession fires.

For more, see Fire allegedly set to avoid foreclosure.

For story update, see Woman pleads no contest to arson of her own home.

For other stories on fires & foreclosures, go here and go here. foreclosure arson yak zebra

Man Facing Foreclosure Dies In House Fire

In Burien, Washington, KIRO-TV Channel 7 (Seattle) reports:
  • A reclusive Vietnam veteran who had recently received notice of foreclosure on his Burien house was found dead after a fire at his home of more than 20 years early Wednesday morning, firefighters and neighbors told KIRO 7 Eyewitness News.


  • The man, whose identity hasn't been released, died alone in a back room of the house, firefighters said. The cause of the fire is under investigation. King County fire investigators were seen sifting through the rubble and arson dogs were brought to the scene.

For more, see Investigators Gather Clues To Cause Of Fatal Fire, or watch the KIRO-TV Channel 7 video report. zebra

Another Vacant Foreclosure Goes Up In Flames; Arson Suspected

In Fall River, Massachusetts, reports:
  • Investigators are eyeing arson as the cause of a Wednesday morning blaze that gutted an abandoned house, police said. Officials have ruled out accidental causes as the reason for the fire, which caused about $200,000 in damages to a multifamily house ... just before 1 a.m., police spokesman Sgt. Thomas Mauretti said.

According to the story, the vacant home is either currently in foreclosure, or has already been foreclosed by Fannie Mae. For more, see Arson eyed in Fall River fire. zebra

Subprime Refinancing Leaving Some Homeowners Financially Strapped

The following links are to a collection of recent articles on homeowners who are now finding themselves in or near foreclosure as a result of signing mortgage refinance loan documents that they apparently didn't understand.

1) Jacksonville, Florida - A 70-year-old Atlantic Beach, Florida widow has retained the services of Jacksonville Area Legal Aid to fight the foreclosure of her home by Ameriquest, who refinanced her mortgage three times since 2001, promising to help her lower her interest rate and monthly payments. In fact, her original payment has more than doubled. She charges that Ameriquest took advantage of a sick widow who didn't finish high school and is unable to understand financial contracts. See Beaches woman caught in a foreclosure cycle (But her lawyer says Ameriquest took advantage of her).

2) San Francisco, California - A Bay Area man is nearing foreclosure as a result of an "Option Arm" refinance of his home mortgage through Countrywide, who allegedly told him that his payments would be cut by about half; the payments actually went up by about $300. Further, he charges that someone originating the loan inflated his stated income by double on the loan application, notwithstanding the fact that he only produced pay stub verification for half the amount. See Bay Area Complaints Pile Up Against Countrywide, or watch TV report, CBS 5 Investigates: The Mortgage Blues.

3) Marin County, California - A disabled Marin County woman has retained an attorney to fight a foreclosure of, what her attorney calls, "an outrageous subprime loan." All she wanted was some money to fix her home of 30 years, and now she's on the verge of losing it. She is currently suing lender New Century Financial and mortgage broker PrimeWest, among others, seeking damages for negligence and fraud. See Homeowners unwittingly face foreclosure.

4) Detroit, Michigan - The problem of subprime refinancing is illustrated by the story of one family who lost their home to foreclosure on a refinanced mortgage that they were reportedly told that the payments would start at $504 a month, and would rise no higher than $569. Despite the broker's reassurances, the family's house payments reached $900. See Risky loans rock area: Metro Detroit is No. 1 in subprime mortgages (High-interest loans tied to growing foreclosure rate).

5 - South Windsor, Connecticut - Another Ameriquest horror story. A couple who wanted some money to do kitchen renovations and pay down some debt say they ended up getting locked into a skyrocketing adjustable mortgage, in which their payment went from $1,600 per month to $2,200 in a little more than a year. See Family Struggles With Skyrocketing Mortgage (Nearly 2 Million Expected To Lose Homes To Foreclosure This Year), or watch WFSB-TV Channel 3 report.

6- Fort Worth, Texas - One more Ameriquest story; another refinance for some cash to do some home improvements. The homeowner reportedly wound up with a loan from Ameriquest that didn’t even give him enough money for the repair, but almost doubled his monthly payments over the next few years. The homeowner had sued Ameriquest for mortgage fraud. Currently, the homeowner is dead. His brother thinks that the worry over his bad loan with Ameriquest and its extremely serious consequences was a factor in his brother's demise. Apparently, the brother had overcome a serious drinking problem years before, but the problems he had with the loan and his house caused him to stumble again. He died about a year ago from cirrhosis of the liver, caused in part by excessive drinking. According to his brother, “He was a mess in his last few months of his life. This whole problem with his house physically drained him. It dragged on and on."

Reportedly, the case against Ameriquest is still pending, though it is in limbo, according to the attorney handling the case. The homeowner left no will and had no assets besides the house; the brother said he couldn’t afford the legal bills for court hearings that would be required for him to be appointed executor of the estate, so at this point there is no one to keep the case going. See Too Little, Too Late (Predatory lending action is helping some, but the worst may still be ahead).


P.S. - Ameriquest has agreed pay out $325 million to borrowers across the country to settle class-action suits brought by attorneys general in 49 states and has gone out of business.

7) Suffolk County & Westchester County, New York - see The American Dream Foreclosed.

8) Metro Cincinnati, Ohio - see America's "most affordable" shows strain of tough times.

Go here for stories of other victims of subprime refinancing. victims subprime refinancing alpha